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Small US cities that have a stable base of industry, a young and educated workforce, plentiful venture capital and a reasonable cost of living are the most conducive to startups, according to BusinessWeek and ZoomProspector, which recently collaborated to identify the best small city in each state in which to start a business.

To find the most ideal places, ZoomProspector focused on locations with populations between 20,000 and 200,000 and took into account 11 factors that shape a city’s entrepreneurial climate, from the education level of the workforce to the amount of venture-capital investment to the number of startups.

After the places were identified using the Zoom Prospector website, researchers than asked a selected group of entrepreneurs in each location to reflect on doing business there to ensure there was a match between the data and the reality.

The research found that, among other things, proximity to a university was an important factor in city selection. As examples, the cities of Ann Arbor, Mich., Auburn, Ala., Cambridge, Mass., and Colombia, Mo., all were tops in their respective states

Other cities have socioeconomic climates that are ready-made for small businesses. For example, Hoboken, N.J., because of its densely packed, service-oriented population and proximity to New York City – with a slighly lower cost of living than it’s much larger neighbor – ranked highest in its state.

Click on the map below to see the top small city in each state.


View Map – US in a larger map

About the research: ZoomProspector selected the best small city in each state based on a formula weighing the following 11 factors: workers with at least a bachelor’s degree (2008); white-collar workers (2008); “young and educated” population (2005-07); workers in “creative” professions (2005-07); international talent (2005-07); universities (2007); patents (2007); venture-capital funding (2006); small businesses per capita (2008); sole proprietors per capita (2005); and startups per capita (2004-05). All data was compiled by ZoomProspector.

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