What makes a city a startup hub?

The Kauffman Foundation caused a stir in economic-development circles last month with a report showing that high-tech startups are more evenly spread across the United States than many people assume.

When researcher Ian Hathaway, an economic advisor with the advocacy group Engine, ranked metropolitan areas in terms of their per-capita density of high-tech startups, his top-25 list included a number of seemingly surprising names like Boulder, Fort Collins, Loveland, Colorado Springs, and Grand Junction in Colorado.

Not so fast, says a second report from the Kauffman Foundation.

Dane Stangler, director of research and policy at the Kansas City, MO-based foundation, says that when he dug deeper into the data in the appendices of his colleague’s paper, he found that most of the cities being portrayed in news reports as novel startup hubs actually have a long history of high-tech industrial activity and a strong culture of entrepreneurship.

“Some of the coverage of Ian’s paper really annoyed me,” Stangler tells Xconomy. “Ian’s paper was a really good starting point, but one thing it didn’t show was a comparison over time between cities, and by size class. If you look at these ‘new’ startup places, a lot of them were already there in 1990.”

When Stangler plumbed Hathaway’s data for common characteristics that might explain how regions achieve high startup densities, he didn’t come up with much. Some startup-rich areas have diverse and highly educated populations; others don’t. Some regions boast a lot of socioeconomic mobility; others don’t. Some are home to top research universities or federal facilities like national laboratories or military bases; others aren’t.

The only common thread seems to be what Stangler calls “entrepreneurial genealogy”—a tradition of established companies that train future entrepreneurs and spawn spinoffs.

Read the original article here.

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