Why Riverside California made it to Inc’s 50 Best Places in America for Starting a Business?

By: Sharjeel Sohaib

• 

Oct 28, 2021

 • 

Why Riverside California made it to Inc’s 50 Best Places in America for Starting a Business

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Inc. Magazine published a list of the 50 best places in America for starting a business, whether a startup or a CEO strategizing to open another office. The magazine also calls these ‘surge cities.’

Riverside, California, made it to the list and was ranked 23 with greater startup density than Silicon Valley.

We have covered it in our Weekly Wire Roundup

Best Place: Should we Consider it Literally?

The idea of the ‘best place’ to start a business should not be taken literally. We’ve seen startups succeed in unlikely places. This article by Tech Stars counts five reasons that startups should consider cities other than those considered as the ‘best’ to start a company/business,

  • Smaller cities allow innovators to develop and penetrate social and business networks quickly.
  • Smaller cities create more obvious centers of density
  • Smaller cities are more affordable
  • Smaller cities allow innovators to be more visible
  • Smaller cities make it easier to focus (Source: Tech Stars)

We agree. However, your startup’s needs should dictate whether you stay at the ‘best places’ in America to start a business or move to 2nd best places elsewhere. Elon Musk moved Tesla’s headquarters to Texas from California, a rare move by companies starting in Silicon Valley.

Similarly, Amazon has long survived outside Silicon Valley, based in Seattle, Washington. Plant Prefab, a construction-tech startup, raised $30 Million Series B here in San Bernardino. You get the idea. ‘Best place’ is a relative term and may be taken as such.

On to the things that make cities attractive to start new businesses, per Inc.’s analysis.

Startup Density

A surprising statistic from Inc.’s study is that Riverside, CA has 92.4 startups for every 1,000 businesses, a greater startup density than San Jose, San Francisco, or Boston. Startup density is measured as the number of newly established employer businesses to the total employer business population (in 1,000s).

We now move to individual ranking factors that the business magazine took into account and how Riverside, CA, ranked on each of them.

Factors that Determined Score of Riverside, CA

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Why Riverside California made it to Inc's 50 Best Places in America for Starting a Business? 4

Rate of Entrepreneurship: 5.4

The rate of entrepreneurship is defined as the percentage of adults who are entrepreneurs, including solopreneurs, regardless of industry or employment status in the 2017 to 2018 period.

Riverside scored 5.4 in this area.

High-growth Company Density: 0.7

This is the number of high-growth companies for every 100,000 adults, including only Inc. 5000 firms with $2 million in annual revenue and 20% year-over-year growth for three years in 2017 and 2018.

Riverside scored only 0.7 compared to Salt Lake, Utah, which has a high-growth company density of 6.1

Population Growth: 1.3

Percentage growth from July 2016 to July 2017.

Net Business Creation: 7.4

Over-the-year percent change in the number of business establishments from Q1 2017 to Q1 2018. Riverside fared better in terms of business creation scoring 7.4.

Wage Growth: 2.8

Over-the-year percent change in average weekly earnings from Q1 2017 to Q1 2018. In terms of wage growth, Riverside scored 2.8.

Job Creation: 3.6

Over-the-year percent change in the number of jobs from Q1 2017 to Q1 2018. Riverside scored 3.6. Riverside ranked fairly well, at-least compared to other places that scored below Riverside, except Orlando, which scored the same as Riverside, CA.

Early Stage fundraising deals: 0.3

Several early-stage funding deals for every 100,000 adults from October 2017 to October 2018.

Riverside scored 0.3, which is one of the lowest compared to the size and population of the Inland Empire.

What to Make of It?

Startup incubators and government leaders can use this guide to improve certain areas where Riverside, CA lacks sorely lacks, such as:

  • Early-stage fundraising deals
  • High-growth company density
  • Wage growth

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