Why Is Arizona A Sizzling Spot For Startups?

English: Biodesign buildings at Arizona State ...

The 2012 Kauffman Index of Entrepreneurial Activity, published in March 2012 by the Kauffman Foundation, reveals important shifts in the national level of entrepreneurial activity over the sixteen-year period between 1996 and 2011.

The report’s key findings also show that U.S. entrepreneurial activity by state rates decreased from 2010 to 2011 in all regions except the Northeast, which experienced a slight increase. The Western region had the highest entrepreneurship rate, and the Midwest had the lowest.

The highest ranked states were Arizona, Texas, California, Colorado and Alaska; the lowest ranked states were West Virginia, Pennsylvania, Hawaii, Illinois, Indiana and Virginia.

What are the factors behind Arizona having the highest U.S. business startup activity? The answer can be found in an informative CNN Money slide show of the 10 Most Entrepreneurial States.

The 2011 startup rate for each state is based on a yearly national survey of about half a million people — adults aged 20 to 64 who start a business each month with 15 or more hours worked. In Arizona, for example, Kauffman found that 520 of every 100,000 adults started businesses in 2011.

Here’s why Arizona is the best state to launch a business, according to the CNN Money slide show:

Arizona is a sizzling spot for startups. People were more likely to launch businesses here than in any other state in the country last year.

Arizona has benefited from a steady stream of entrepreneurs migrating from less business-friendly states like California. The lure? Business and property taxes are low, as are workers’ compensation costs, according to the Arizona Commerce Authority.

What’s more, the labor pool is highly educated, as schools such as Arizona State University and the University of Arizona churn out a steady stream of science and technology grads. The state encourages firms to upgrade employees’ skills, giving grants to those that offer in-house job training.

That’s key, since tech firms dominate Arizona’s new business landscape. Software and semiconductor makers are big here, as are solar, clean-tech and renewable energy technology firms. More traditional fields like retail and tourism also are hot.

Learn why ten states saw more startup activity than anywhere else nationwide at CNNMoney.com.

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