The Best Cities for Tech Startups

CIO.com spoke with members of the National Venture Capital Association (NVCA) to find out what the 15 hottest U.S. cities for tech startups are, what the average IT salary for each city is, and how those salaries have trended over the last five years.

The tech startup information documented here has been furnished by the NVCA. Salary information was gathered via Dice.

‘The Steel City’ has seen the numbers of startups in the area increase by a whopping 33%. It’s also moved up two places on our list of best cities for tech startups as IT salaries have been trending upward over the last three years.

Pennsylvania is working hard to attract startups with legislation like the Ben Franklin Partnership. In this area tech has become a major player in the local economy and Carnegie Mellon, well-known for its technology contributions, is churning out startups through it programs. 32 tech startups were created last year by them, the most ever in a single year.

Although San Marcos dropped a notch on the list, average IT salaries have notably increased, 12.6 percent over the last five years. This is another tech startup area that boasts a low cost of living and for those entrepreneurs that choose the Austin/San Marcos area, it’s worth noting that, like Florida, there is no state income tax.

‘The City of Brotherly Love’ came it at number nine on our list. Average IT salaries have risen impressively; nearly 17 percent over the last five years. The many universities and schools here offer a steady stream of talent and, of course, it’s the home of Rocky Balboa, a fictional character who for some reason is forever immortalized at the Philadelphia Museum of Art. Can the same be said for Rambo?

The bio-tech startup industry is flourishing in this area and the cost of living is low when compared to other major metropolitan areas like New York or Silicon Valley, making this an attractive location for east coast startups.

You don’t typically think Chicago when you think about the tech startup scene but ever since Groupon moved into town, Chi-Town has been hitting its collective stride. In fact, Chicago moved up two positions on our list of best cities for tech startups. Average IT salaries have also increased 9.1 percent over the last five years, making this tech startup area very hot. There is a flurry of activity with companies being absorbed and bought out and according to George Deeb, Managing Partner at Chicago-based Red Rocket Ventures, big venture capitalists on the coast have begun to take notice.

Some of the biggest names outside of the Silicon Valley call Seattle their home, or in the very least, their part-time home. Tech giant Microsoft makes its home in Redmond. Google has over a thousand engineers in Seattle making it the second largest Google office outside of Mountain View, California. Amazon, eBay and Facebook have also set up shop here.

It’s hard to be the smartest guy in the room when you’re working for organizations like this. That’s right folks, the talent pool is deep here and many of the biggest people in tech set up shop here just to take advantage of that fact.

Follow the money and all roads lead to Washington D.C. and the surrounding Baltimore area. The Nation’s capital clocks in at number six on the list of best cities for tech startups. It’s America’s hub and where our collective rubber meets the road. As you might guess, government drives a lot of the business in this region but there is also this underlying network of small startups trying to solve some of America’s most difficult problems.

Venture capital was essentially flat year over year and average IT salaries have declined over 2012 numbers, but if historical trends continue these will likely increase.

Average IT salaries in ‘Silicon Beach,’ as it’s been called, grew 3.6 percent in 2013 but equity investments remained flat. That said, there is a thriving digital media and entertainment industry in the LA area. If your startup ties into the entertainment industry then LA or NYC are the obvious choices.

The city is in close proximity to several major universities which are supplying engineering talent, while the city has several accelerator and incubator programs to help companies grow.

Although the average IT salary has been increasing steadily, people considering California as a new home have to consider cost of living as well.

Boston has immense history, culture and numerous universities. There are close to 48 tech schools in fact, with some of the biggest names in technology including MIT, Harvard, and Northeastern, to name a few. These schools help feed what is a thriving tech startup scene. Although the average IT salary decreased year-over-year, Boston still remains among the top ten cities with the highest average IT salaries.

In a recent Mashable article, Boston Mayor, Marty Walsh stated that he fully expects Boston to become the ‘tech capital of the world.’

Although San Jose fell to number three in 2013, tech venture capital investments increased by eleven percent, topping 3.6 billion dollars. The lower cost of doing business, when compared to San Francisco and Silicon Valley, continues to draw in more companies and more investment cash. With real estate prices skyrocketing in Silicon Valley this trend will likely continue.

‘The Big Apple,’ always near the top, comes in at number two on our countdown. ‘Silicon Alley,’ as it is referred to, used to represent a concentration of Internet-based and digital media organizations in Manhattan. But it has grown considerably over the last several years and has now come to represent the entire dot com and tech startup industry within New York City. Tumblr, KickStarter, Etsy and many other promising organizations call this concrete jungle their home.

Apparently if you can make it here you can make it anywhere…

It’s no surprise that Silicon Valley tops the list. Heck, Mike Judge recently made a show on HBO about how crazy the startup mentality is here. The area has become so populated with the tech crowd that locals have begun to revolt.

According to NVCA numbers there are over five billion dollars in startup capital invested here. Combine that with the fact that the area is home to some of the largest tech companies on the planet and it’s easy to see why this is an attractive location (although you’ll probably never own property here).