West is best for women entrepreneurs, as researchers discovered in the inaugural MerchantMaverick.com “Best States for Women-Led Startups in 2021” report, specifically states west of the Mississippi.
The researchers at Merchant Maverick, a business product comparison site for small business owners, discovered that 1.7% of all women in these key western states own their own business, significantly above the national average of 1.4%.
The top 10 states also demonstrated higher employment for women-led businesses. The key metric researchers used: “percent of those employed by women-led firms” – no Top 10 state is ranked worse than 19th, and six states manage to crack the metric’s top 10.
What makes that geographical region so favorable?
There may be a cultural component: certain states in the Great Plains and the Midwest and some states in the South don’t offer women entrepreneurs similar opportunities to their male counterparts, the researchers discovered. In many cases, these lower-ranked states receive inadequate amounts of capital for venture-backed startups led by women. They also struggle to match the gender parity seen in higher ranked states.
And of course, no Top 10 list can ignore COVID’s impact, which has changed the economic landscape, often for the worse. To help factor in COVID, the researchers included specific metrics which take the pandemic into account.
Researchers took a deep-dive into data from heavy-hitting sources, including The US Census Bureau’s 2019 American Community Survey, Kauffman Indicators of Entrepreneurship, and the US Bureau of Labor Statistics. They analyzed the findings to bring you the Best States for Women-Led Startups.
These lists below show the quick snapshot, and the full report is available HERE.
The Top 10 States for Women-led Startups:
The Bottom 5 States for Women-led Startups:
#48. West Virginia
To best determine the best states for women-led startups, the researchers selected and weighted the following metrics:
- Percent of employer firms led by women (15% of the overall score): This metric compares the number of employer firms led by women to the total number of employer firms in the state, per data from the Census Bureau’s 2018 Annual Business Survey.
- Percent of employees at women-led firms (15%): This metric compares the number of employees at women-led employers to the total number of employees in the state, per data from the Census Bureau’s 2018 Annual Business Survey.
- Percent of women self-employed in their own business (15%): This metric compares the number of women self-employed in their own business to the total number of women in the state, per the US Census Bureau’s 2019 American Community Survey.
- Average income of women self-employed in their own business (15%): This is simply the average yearly income for self-employed women business owners, per the US Census Bureau’s 2019 American Community Survey.
- Total venture capital invested into women-led startups (15%): For this metric, data from PitchBook’s US VC Female Founders Dashboard was recorded to calculate the amount of capital invested into venture-backed startups led solely by women within each state.
- Percent of startups still active after one year (10%): Also known as startup early survival rate, this metric measures the immediate survival of startups. Early survival rate gives key insights into the success rate of young startups on a state-by-state basis.
- State income tax rates (7.5%): Each state’s highest income tax bracket for 2020 was tallied, with lower tax rates being considered better. States with lower income tax rates can provide entrepreneurs greater earning potential.
- Unemployment rates (7.5%): These rates were pulled from the Bureau of Labor Statistics’ October 2020 update. For the purposes of this report, unemployment rates are used as a snapshot to gauge the economic health of each state.
“We have to congratulate the top states for creating an environment that helps woman entrepreneurs thrive,” says Julie Titterington, Editor-in-Chief, MerchantMaverick.com. “And we hope that all 50 states strive to make our list in the future.”