A new study from USA Today examined metrics that influence the performance of new businesses in major U.S. cities. Out of 46 contenders, Austin, Texas, showed the most promising statistics for business success — leading the study analysts to name it the best city to start a business in the U.S.

The data provides a strong case for entrepreneurship in Austin, but proof of the city’s business strength goes beyond numbers. Austin serves as the setting for many successful startup stories, including many highly sought-after “unicorn” ventures. The city’s spirit of innovation and supportive business infrastructure — with pillars in the McCombs School of Business and The University of Texas at large — make it an environment where new business ideas can thrive.

Many of these business innovations have their roots at Texas McCombs, where students can gain expertise and confidence in entrepreneurship. McCombs is home to the first-of-its-kind Master of Science in Technology Commercialization (MSTC) graduate program, designed to help students bring their business ideas to market.

A combination of economic metrics, government policies, cultural ideals, and supportive business infrastructure make Austin the top city to start a business, and many McCombs alumni entrepreneurs have experienced firsthand how the city supports business success.

Austin ranked among the top 10 cities for two key metrics in the USA Today study: business births and business entry rate. As you can guess, “business birth” refers to the creation of an entirely new business entity, as well as the reopening of closed businesses or the acquisition of one business by another.

According to the study, Austin had more than 7,000 business births in 2024. Although this number is more modest than those of major cities such as New York and Los Angeles, which see tens of thousands of business births per year, Austin also had a much lower business “death rate” than other cities. The city’s new business population is growing year over year, netting 1,629 new businesses in 2024.

Austin’s business entry rate, which measures the number of newly registered businesses, also reflects this population growth. In 2024, 13.5% of Austin businesses were newly founded.

One of the statistics for which Austin ranked the highest was the number of households that reported self-employment income to the U.S. Census Bureau, which came in at 13.2%. This statistic captures how much economic value can be created by individual entrepreneurs outside of incorporated businesses.

Although the metric doesn’t account for bigger startups with multiple salaried employees, self-employment income shows how independent business owners, consultants, and contractors are driving innovation and contributing to the local economy, serving as a strong indicator of the city’s overall economic health. And it’s possible that with time and investment, these young, one-person businesses could scale up into bigger operations.

Both new startups and self-employed individuals feed into the city’s overall growth in GDP (gross domestic product), the value of all goods and services produced in Austin. According to the USA Today study, Austin experienced a 14.3% increase in GDP during 2021 and 2022, the largest of all major cities in the U.S. aside from El Paso, Texas. In combination with other positive trends, Austin’s GDP growth reflects the city’s holistic economic health.

USA Today’s study offers promising statistics for new business owners in Austin, but this data is just one component of a larger story about the city’s unprecedented economic growth and why it occurred. Of course, economic policy factors are a major contributor, but Austin’s appeal to top entrepreneurs goes beyond money: It’s one of U.S. News & World Report’s Best Places to Live in the U.S. and is home to a supportive community that makes entrepreneurs and innovators feel at home.

Texas State Economic Policies

Texas has numerous economic policies that boost new businesses and entrepreneurship within the state and attract entrepreneurs and businesses from other states. Most notably, Texas does not have personal or corporate income taxes, allowing businesses to retain more of earnings and reinvest these earnings to support their growth over time.

The state offers opportunities for businesses to maximize their financial potential. Private businesses that promote economic development in the state can apply for tax-free funding in the form of an industrial revenue bond, and some businesses qualify for specialized grants that go toward research and development of new technologies, employing more people from their local community, and other programs that strengthen the state’s economy. Tax credits are also available to businesses started by veterans and businesses that operate in economically distressed areas.

Austin Business Incentives

Austin’s local government provides its own incentives to bolster new businesses within the city. Its dedicated Small Business Division offers training, educational events, and mentorship to new entrepreneurs, as well as opportunities to network and connect with potential funders. There are numerous incentives and grants for businesses that encourage them to hire locally and engage in sustainable, environmentally-friendly practices, like increasing recycling and reducing food waste and energy use. Both the Travis County and the City of Austin governments have special programs to support historically underrepresented entrepreneurs, including helping veteran-, minority-, and women-owned businesses participate in the government’s procurement processes. In addition, new entrepreneurs can connect to resources through the Austin Chamber of Commerce, which engages with and encourages collaboration between small-business owners across industries.

In the same way plants can grow stronger and live longer when they take root in fertile, nutrient-rich soil, new business startups fare better when they take root in a culture that embraces innovation and encourages ideas to blossom. Austin’s forward-thinking, creative culture is deeply compatible with startup culture, especially in the tech space.

Tech Industry in Austin

Austin is widely known as a tech industry hub — in fact, its abundance of tech companies has earned it the nickname “Silicon Hills,” a nod to California’s Silicon Valley combined with the Austin region’s Hill Country terrain.

The roots of Austin’s modern reputation for technological innovation can be traced back further than the Social Network-style startup boom of the 2000s, or even the genesis of internet companies during the late 20th century. Business, political, and academic leaders collaborated to establish the foundation for the Silicon Hills all the way back in the 1960s, when then-McCombs Dean George Kozmetsky pioneered a vision of Austin as a hub for technological innovation. He founded the Institute for Constructive Capitalism (IC²) at UT Austin, a research institute dedicated to fostering economic growth and entrepreneurship in the region, and helped establish the Austin Technology Incubator, which identifies and supports emerging companies. These combined efforts grew Austin from a modest-sized capital city to the booming technopolis that it is today.

Austin is home to many big tech players: Dell Technologies is headquartered nearby in Round Rock; and Apple, Meta, Google, and Tesla all have their own campuses in and around the city. But there’s plenty of room for smaller startups to make their mark. More than 20 unicorn companies started in Austin during the past two decades, including Bumble, Indeed, and CrowdStrike. The city’s entire startup ecosystem is valued at more than $89 billion, and Austin-based startups received almost $4 billion in venture funding in 2024.

Resources for startup founders

Like any thriving ecosystem, Austin’s startup scene is abundant with resources that help new entrepreneurs and businesses grow to their full potential. The city has infrastructure that enables founders to network, connect with investors, and hone their ideas to become market-ready. Local entrepreneurial communities such as the Capital Factory provide space for aspiring founders and established enterprise owners to find synergy with one another, and huge events such as the annual South by Southwest (SXSW) festival can elevate local companies to the global stage.

The University of Texas at Austin itself is an invaluable resource for Austin startups. The school’s programs attract and train students from within Texas and around the world, leading to a strong base of hirable talent across the fields of business, engineering, science, and more. In addition to the Austin Technology Incubator, the University is also home to centers, initiatives, and incubators that support students and researchers as they develop technological and business innovations, including McCombs’ newly founded Harkey Institute for Entrepreneurial Studies,

Of course, education and training are the resources that the University is best equipped to offer new business owners. The McCombs School of Business has a specially designed program where entrepreneurs and business founders can learn how to launch their ventures.

The University of Texas at Austin’s Master of Science in Technology Commercialization (MSTC) program is the first program of its kind in the U.S. It’s designed to equip working professionals with technology commercialization, assessment, transfer, and entrepreneurship skills that are necessary to bring new technological ideas to the market. The STEM-designated program can be tailored to each student’s unique goals and offers ongoing coaching, networking, and career support from experienced professionals and faculty members.

MSTC Curriculum

The program’s curriculum sharpens students’ leadership and management skills, while also focusing on honing the practical and statistical skills that can make or break a new business’s success. Courses range from marketing to accounting and operations management, and students come away from the program with the skills to evaluate emerging technologies’ potential value and develop and present business, marketing, and operations plans to investors and stakeholders.

“Entrepreneurship is learnable, but you have to practice it, not just read about it,” says Michael Peterson, an entrepreneur, founder, and assistant professor of instruction in McCombs’ MSTC program. “The MSTC program serves as a concentrated accelerator, providing the structure, mentorship, and university resources to help founders rapidly develop their ventures with a strong team.”

Students leave the program prepared to dive into the holistic process of starting a new business, from the genesis of an idea to introducing the new technology to market. During their studies, students also connect with one another through their small cohort community and get to experience the global marketplace through an international trip to Singapore, Portugal, or South Africa.

MSTC Success Stories

Because McCombs’ MSTC program combines academic study with the resources of a startup accelerator, many students have gone on to launch businesses from the program. “The MSTC program takes entrepreneurs beyond the classroom and into the real world, where they build actual companies,” says Peterson. “We teach entrepreneurs how to source ideas from R&D organizations, including universities, and validate whether a problem is significant enough to build a startup around. We use the Quicklook process that was developed at NASA to evaluate technologies. It helps to create a common language for founders and a repeatable process to find good ideas.”

MSTC alumni have found success in the software, robotics, and consumer product goods industries. Some companies launched by MSTC alumni include:

Learn more about the MSTC program

The MSTC program is always seeking ambitious applicants who are ready to take their business ideas to market. Learn more about this flexible, one-year program on the McCombs website.