Historically low interest rates and high government stimulus provided entrepreneurs and investors with easy access to funding. Transitions to remote and hybrid work and the rise of ecommerce made digitally-based businesses more attractive. Amid the Great Resignation, more workers considered career alternatives including entrepreneurship. While inflation and rising interest rates have somewhat cooled activity in the market more recently, signs point to sustained interest in entrepreneurial activity.

Trends in U.S. Entrepreneurial Activity

Since the beginning of COVID-19, interest in buying and selling businesses has exploded

Source: Flippa analysis of Google Trends data (2005–2024) | Image Credit: Flippa

According to data from the U.S. Census Bureau, total new business application volume today is approximately 50% greater than before the pandemic began in early 2020. And entrepreneurs are also considering transactions around existing businesses. Google search data has shown a spike in the search terms “how to sell a business” and “how to buy a business” in recent years. In the Google Trends index, search interest in both terms has risen from the high 30s (out of 100) before COVID to 80+ now, indicating significantly elevated interest.

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Total M&A Transaction Volume by State

While California accounts for the most buyer volume, lower-tax states account for a greater proportion of seller volume

Source: Flippa marketplace transactions (2016–2024) | Image Credit: Flippa

In recent years, the rapid pace of digital transformation has generated unparalleled demand for online businesses. While interest in entrepreneurship is up throughout the country, the volume of transactions varies by geography. Notably, residents in California, the epicenter of Silicon Valley, lead the pack of digital asset buyers, followed closely by those in Florida. Each state accounts for approximately 14% of total buyer volume. Other top states for buyers include Texas (8.9%), New York (7.3%), and Illinois (6.1%). 

However, the scenario shifts when examining sellers, where California residents do not dominate transaction volumes to the same extent. Instead, residents from states with lower or no tax implications, such as Florida, Texas, and Washington, command a significantly higher share of total seller volume at 15.8%, 14.2%, and 12.8%, respectively.

Per Capita M&A Transaction Volume by State

States in the Mountain West & Florida stand out for high levels of business transactions

Source: Flippa marketplace transactions (2016–2024) | Image Credit: Flippa

On a per capita basis, states in the Mountain West and Florida are home to a higher volume of buyers. Wyoming leads all states in buyer volume per capita at 3.38 times higher than the U.S. average, with other western states like Idaho, Arizona, and Washington also having buyer volume more than twice the national rate.

Leading states for sellers include Delaware, where the seller volume per capita is nearly 11 times higher than the U.S. average, and Wyoming, where the volume is almost 10 times higher. Delaware, Wyoming, and other leading states for sellers tend to be popular places to start a business due to business-friendly regulatory and tax structures. For example, Delaware is known for having clear corporate law, good liability and privacy protections, an efficient corporate court system, and certain tax advantages that make it an attractive place to operate. Meanwhile, Wyoming is regularly rated as having one of the best tax climates for businesses due to its lack of corporate and individual income taxes and relatively low sales tax rates.

Below is a comparison of per capita business transaction volumes for buyers and sellers in all 50 states. The analysis was conducted by Flippa using over 100,000 business transactions on its marketplace spanning the past eight years. For more information, see the methodology section below.

States With the Most Active Buyers

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States With the Most Active Sellers

Methodology

The data used in this study is from a proprietary set of more than 125,000 digital asset sales that occurred on the Flippa.com marketplace between 2016 and 2024. To determine the states with the most active tech investors, researchers at Flippa calculated how each state’s total transaction sales volume per capita compared to the U.S. average for both buyers and sellers. The total transaction sales volume was calculated as the sum of the sale prices for all transactions. States were ordered by the per capita buyer transaction volume.

References

1. Federal Reserve Economic Data (FRED). (2024, February). FEDFUNDS – Effective Federal Funds Rate. https://fred.stlouisfed.org/series/FEDFUNDS Retrieved March 9, 2024.
2. Federal Reserve Economic Data (FRED). (2024, February). FGEXPND – Federal Government: Current Expenditures. https://fred.stlouisfed.org/series/FGEXPND. Retrieved March 9, 2024.
3. World Economic Forum. (2022, February). The great resignation: Boom in startups from more diverse founders. https://www.weforum.org/agenda/2022/02/the-great-resignation-boom-in-startups-from-more-diverse-founders/
4. U.S. Census Bureau. (n.d.). Interactive Visualizations – Business and Financial Statistics. https://www.census.gov/econ/bfs/visualizations/interactivegraphs.html Retrieved March 9, 2024.
5. Harvard Business Services, Inc. (n.d.). Benefits of Incorporating in Delaware. https://www.delawareinc.com/before-forming-your-company/benefits-of-incorporating-in-delaware/
6. Tax Foundation. (2023, October). 2024 State Business Tax Climate Index. https://taxfoundation.org/research/all/state/2024-state-business-tax-climate-index/

Full Results

These shifts in the economic landscape, coupled with pent-up demand following a period of diminished deal volume spanning more than a year, have spurred optimistic forecasts from industry leaders such as PwC and Bain, predicting a robust year ahead for deal-making.

In anticipation of heightened activity, researchers at Flippa—the world’s leading platform to buy and sell online businesses—analyzed key deal characteristics of more than a thousand business sales over the past two years. This extensive dataset encompasses nine primary business types, 15 sectors, and nearly 60 subsectors, providing valuable insights to assist potential buyers and sellers in navigating the evolving landscape of M&A.

Profit Multiples by Deal Size

Source: Flippa marketplace transactions

Profit multiples vary depending on the dollar value of the acquisition, with a clear trend of increasing multiples as the deal size grows. For micro businesses exiting from $25,000 to $100,000, profit multiples averaged 3.1, with the top quartile reaching 4.1. However, for businesses exiting in excess of $1 million, the trend accelerates with profit multiples rising to an average of 6.1, and the top quartile reaching an impressive 7.1.

The observed trend of increasing profit multiples with larger deal sizes can be attributed to several factors. Larger acquisitions often entail businesses with established revenue streams, stronger market positions, and greater growth potential. Consequently, buyers may be willing to pay higher multiples for businesses with a proven track record of performance and scalability. Additionally, larger acquisitions may offer strategic alignment or operational efficiencies that justify higher valuations. Moreover, larger deals may attract a more competitive bidding process, driving up valuations and resulting in higher profit multiples for sellers.

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Company Financials by Deal Size

Source: Flippa marketplace transactions

A common question among sellers revolves around what it takes to achieve a seven-figure exit. Analyzing data spanning the past two years shows that businesses that sold for at least $1 million had an average annual revenue of $2.8 million, with an average annual profit of approximately $1.6 million. Interestingly, there was no statistically significant difference in the average age of businesses across the sales tiers, with the typical business age at the time of sale falling between nine and 10 years. It was surprising to see how established and tenured these businesses are. 

Days on Market by Deal Size

Source: Flippa marketplace transactions

Another noteworthy difference between the sales price tiers pertains to the time it takes to complete a sale. Businesses that achieved seven-figure exits typically remained on the market for nearly twice as long as those that sold for $100,000 to $500,000 (193 days compared to 105  days). Despite the prolonged waiting period for higher-price-tier sellers, they generally secured more favorable profit multiples than their lower-price-tier counterparts. As discussed previously, the average profit multiple for seven-figure exits over the past two years was 6.1, compared to 2.9 for businesses in the $100,000 to $500,000 tier.

Profit Multiple by Business Type

Source: Flippa marketplace transactions

Profit multiples also vary significantly across different business types. Over the past two years, marketplace, apps, and SaaS businesses commanded the highest multiples.

Marketplaces often benefit from network effects, where the value of the platform increases as more users and transactions occur, leading to higher profit multiples. Additionally, the scalability and potential for rapid growth associated with marketplaces and apps can justify higher valuations. Software as a service (SaaS) businesses are also highly attractive assets due to their higher margins and recurring revenue models, but profit multiples range widely based on several factors related to their viability and growth potential. Revenue metrics such as monthly or annual recurring revenue provide insights into revenue stability and growth trajectory, while profitability metrics like gross margin and EBITDA gauge operational efficiency and financial health. Customer metrics, including customer acquisition cost and lifetime value (LTV), help evaluate marketing and retention strategies. Additionally, factors such as market size, competitive advantage, and product roadmap are crucial for understanding growth prospects and market positioning.

At the other end of the spectrum, content and e-commerce businesses saw the lowest multiples, likely due to higher competition and lower barriers to entry when compared to other business types.

Below is a complete breakdown of profit multiples by sale price tier and business type.

Source: Flippa marketplace transactions; groupings with limited data are not displayed

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Transaction Volume by Business Type

Source: Flippa marketplace transactions

Analyzing the total business acquisition volume across different business types reveals notable variations in market activity. SaaS businesses emerged as the dominant force, comprising the largest share of acquisitions over the past two years. This trend underscores the enduring appeal of SaaS models, driven by their recurring revenue streams and scalability. E-commerce businesses also commanded a significant portion of the acquisition volume, indicative of the continued growth and evolution of online retail platforms in response to shifting consumer behaviors.

Content-based businesses, although representing a substantial share, experienced slightly lower acquisition volumes compared to the SaaS and e-commerce sectors. This trend suggests that while content remains a valuable asset, market dynamics may have favored other business models during the period. Apps, while constituting a smaller share, retained significance due to their potential for user engagement and monetization. Finally, marketplace businesses, while niche, played a notable role in the acquisition landscape, reflecting the enduring appeal of platforms facilitating peer-to-peer transactions.

Industries With the Most Transaction Activity

Source: Flippa marketplace transactions

Among business sales in which the industry was known in 2023, those in the pets, beauty, and fashion industries dominated. Together, these industries constituted approximately one-third of the total transaction volume. What’s noteworthy is not only did each of these industries experience year-over-year growth in total transaction volume, but they also expanded their share of the overall transaction volume. Other industries that experienced notable growth from 2022 to 2023 include football, humor, SEO, and cars. Industries that declined year-over-year include travel guides, shopping, colleges and courses, and cycling.

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Final Thoughts

The analysis of business acquisitions leading up to 2024 reveals optimistic trends for prospective sellers. Marketplaces and apps have demonstrated higher profit multiples compared to SaaS, content, and e-commerce businesses. Notably, larger acquisitions have consistently yielded higher profit multiples, indicating the strategic value attributed to established revenue streams. Industries such as pets, beauty, and fashion have dominated transaction activity, signaling sustained investor interest. 

Additionally, strong financial performance emerges as a key driver of valuation, with businesses boasting solid revenue and profit trajectories commanding favorable attention. These trends collectively underscore promising opportunities for sellers aiming to maximize value in the competitive acquisition landscape.

Methodology

The data used in this study is from a proprietary set of digital asset sales that occurred on the Flippa.com platform between 2022 and 2023. For the purpose of this analysis, only transactions involving mature (at least four years old), profitable businesses with a sale price greater than or equal to $25,000 were included. Additionally, to improve relevance, only the top 50th percentile of transactions based on profit multiples were included in the analysis.

Many small businesses get their start and scale up with SBA loans, which increased lending to Black, Latino, and women entrepreneurs in the past few years in step with efforts to become more equitable.

Flippa found the county within each state where applicants were approved for the most SBA loan funds per capita in fiscal year 2023, which ended in September. The analysis was based on the SBA’s most common loan program, known as 7(a) loans. States are listed in alphabetical order.

SBA’s 7(a) program provides extra security to lenders when they loan money to small businesses that might otherwise be considered too risky to grant. Loans can be for up to $5 million, but in 2023, nearly 7 in 10 loans were for amounts of $350,000 or less. Small businesses can use these funds for real estate acquisitions or improvements, working capital, supplies and equipment, and for other business startup or acquisition purposes.

Barriers do still exist for eligibility, including income, credit history, and location, but SBA loans can be fruitful for founders who don’t qualify for conventional business financing. They can also provide protection against high and volatile interest rates, as SBA-backed loans have maximum interest rates that are predictable and often lower than other loans.

All but two of the #1 ranked counties had populations of less than 500,000—most smaller than 100,000. That’s not surprising, as the Census Bureau classifies about 99% of U.S. counties as small. Still, it signifies that these smaller communities are building successful entrepreneurial environments. In most cases, their small businesses are able to succeed beyond those within the major U.S. population centers—at least in terms of success in gaining SBA funding.

Read on to see whether your county was among those receiving the most SBA loans.

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Alabama: Cleburne County

– SBA loan funds approved: $5.6 million (About $375 per resident)
– Number of loans: 5

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Alaska: Sitka Borough

– SBA loan funds approved: $6.1 million (About $716 per resident)
– Number of loans: 4

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Arizona: La Paz County

– SBA loan funds approved: $3.1 million (About $185 per resident)
– Number of loans: 1

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Arkansas: Lawrence County

– SBA loan funds approved: $8.5 million (About $524 per resident)
– Number of loans: 3

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California: Madera County

– SBA loan funds approved: $29.0 million (About $186 per resident)
– Number of loans: 16

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Colorado: Summit County

– SBA loan funds approved: $20.6 million (About $662 per resident)
– Number of loans: 23

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Connecticut: Hartford County

– SBA loan funds approved: $95.6 million (About $106 per resident)
– Number of loans: 212

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Delaware: New Castle County

– SBA loan funds approved: $49.8 million (About $88 per resident)
– Number of loans: 121

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Florida: Gilchrist County

– SBA loan funds approved: $5.6 million (About $317 per resident)
– Number of loans: 2

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Georgia: McIntosh County

– SBA loan funds approved: $10.0 million (About $888 per resident)
– Number of loans: 3

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Hawaii: Kauai County

– SBA loan funds approved: $4.1 million (About $56 per resident)
– Number of loans: 8

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Idaho: Shoshone County

– SBA loan funds approved: $4.8 million (About $365 per resident)
– Number of loans: 4

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Illinois: Logan County

– SBA loan funds approved: $8.2 million (About $291 per resident)
– Number of loans: 2

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Indiana: Bartholomew County

– SBA loan funds approved: $16.4 million (About $201 per resident)
– Number of loans: 10

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Iowa: Chickasaw County

– SBA loan funds approved: $2.5 million (About $207 per resident)
– Number of loans: 6

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Kansas: Gove County

– SBA loan funds approved: $2.0 million (About $721 per resident)
– Number of loans: 1

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Kentucky: Owen County

– SBA loan funds approved: $5.1 million (About $456 per resident)
– Number of loans: 2

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Louisiana: Claiborne Parish

– SBA loan funds approved: $6.0 million (About $412 per resident)
– Number of loans: 5

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Maine: Knox County

– SBA loan funds approved: $5.3 million (About $132 per resident)
– Number of loans: 19

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Maryland: Allegany County

– SBA loan funds approved: $6.5 million (About $95 per resident)
– Number of loans: 9

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Massachusetts: Nantucket County

– SBA loan funds approved: $3.3 million (About $240 per resident)
– Number of loans: 8

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Michigan: Keweenaw County

– SBA loan funds approved: $4.3 million (About $2,101 per resident)
– Number of loans: 5

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Minnesota: Marshall County

– SBA loan funds approved: $5.1 million (About $559 per resident)
– Number of loans: 4

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Mississippi: Smith County

– SBA loan funds approved: $7.3 million (About $506 per resident)
– Number of loans: 14

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Missouri: Pettis County

– SBA loan funds approved: $17.4 million (About $406 per resident)
– Number of loans: 9

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Montana: Sweet Grass County

– SBA loan funds approved: $4.8 million (About $1,312 per resident)
– Number of loans: 1

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Nebraska: Nuckolls County

– SBA loan funds approved: $2.2 million (About $521 per resident)
– Number of loans: 1

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Nevada: Carson City

– SBA loan funds approved: $13.3 million (About $229 per resident)
– Number of loans: 15

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New Hampshire: Rockingham County

– SBA loan funds approved: $35.3 million (About $113 per resident)
– Number of loans: 117

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New Jersey: Cape May County

– SBA loan funds approved: $26.7 million (About $280 per resident)
– Number of loans: 27

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New Mexico: Torrance County

– SBA loan funds approved: $4.2 million (About $280 per resident)
– Number of loans: 1

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New York: Essex County

– SBA loan funds approved: $11.5 million (About $306 per resident)
– Number of loans: 8

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North Carolina: Dare County

– SBA loan funds approved: $13.3 million (About $362 per resident)
– Number of loans: 8

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North Dakota: Oliver County

– SBA loan funds approved: $384,000 (About $208 per resident)
– Number of loans: 1

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Ohio: Putnam County

– SBA loan funds approved: $7.4 million (About $214 per resident)
– Number of loans: 10

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Oklahoma: Craig County

– SBA loan funds approved: $4.4 million (About $311 per resident)
– Number of loans: 2

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Oregon: Wasco County

– SBA loan funds approved: $6.1 million (About $229 per resident)
– Number of loans: 7

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Pennsylvania: Jefferson County

– SBA loan funds approved: $6.8 million (About $153 per resident)
– Number of loans: 8

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Rhode Island: Kent County

– SBA loan funds approved: $14.9 million (About $88 per resident)
– Number of loans: 39

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South Carolina: Jasper County

– SBA loan funds approved: $5.5 million (About $192 per resident)
– Number of loans: 5

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South Dakota: Deuel County

– SBA loan funds approved: $1.5 million (About $341 per resident)
– Number of loans: 1

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Tennessee: Decatur County

– SBA loan funds approved: $3.0 million (About $262 per resident)
– Number of loans: 2

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Texas: Menard County

– SBA loan funds approved: $1.5 million (About $745 per resident)
– Number of loans: 1

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Utah: Piute County

– SBA loan funds approved: $1.4 million (About $746 per resident)
– Number of loans: 1

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Vermont: Windham County

– SBA loan funds approved: $9.2 million (About $201 per resident)
– Number of loans: 15

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Virginia: Richmond County

– SBA loan funds approved: $6.9 million (About $777 per resident)
– Number of loans: 22

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Washington: Columbia County

– SBA loan funds approved: $1.3 million (About $331 per resident)
– Number of loans: 3

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West Virginia: Marshall County

– SBA loan funds approved: $5.3 million (About $172 per resident)
– Number of loans: 3

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Wisconsin: Vilas County

– SBA loan funds approved: $13.6 million (About $597 per resident)
– Number of loans: 8

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Wyoming: Sheridan County

– SBA loan funds approved: $13.9 million (About $451 per resident)
– Number of loans: 7

Story editing by Ashleigh Graf. Copy editing by Paris Close. Photo selection by Michael Flocker.

Though filers may dread the annual process, tax collections are critical for all levels of government in determining revenues, setting budgets, and ultimately providing public services. While states and localities more heavily rely on sales taxes, property taxes, or other types of taxation for funding, many also depend on personal income taxes as part of their revenue mix. In the third quarter of 2023 alone, state and local governments collected $119 billion in individual income taxes, which represented 28.8% of total tax revenue.

State & Local Tax Revenue

The total amount of state & local tax revenue collected increased sharply in recent years

Source: Flippa analysis of U.S. Census Bureau data | Image Credit: Flippa

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The onset of the COVID-19 pandemic sparked a sharp disruption in state and local tax revenue due to the closure of many parts of the economy. Since mid-2022, however, the economy has remained resilient and produced strong state and local tax collections. Consumer spending on taxable goods has been high even in the face of inflation, increasing residential real estate values have boosted property tax collections, and incomes have risen during a run of low unemployment. These and other factors have led to a nearly 25% increase in state and local tax collections since before the pandemic began in early 2020.

However, many of these same factors—particularly inflation and real estate values—have made the cost of living in high-tax states even more expensive. States like New York, Connecticut, and California have the highest state and local tax burdens for their residents and rank among the most expensive locations for cost of living, leaving less in the way of discretionary income. Higher earners in these locations have been burdened further due to new limits on state and local tax deductions.

These expensive states have also seen flattening or declining populations in recent years as more Americans migrate to cheaper locations in the Sun Belt and Mountain regions. Some observers have noted that these states also tend to have lower tax rates as evidence that lower taxes might be motivating interstate movers. However, others suggest that people move for reasons independent of tax concerns and that, in fact, lower taxes in a location may result in underfunded services that make that location less desirable for movers in the long run.

Regardless of why people are moving and whether tax policy plays a role, the ultimate conclusion is that residents in the U.S. are subject to vastly different tax liabilities depending on where they live. For high earners, these variations can add up to tens of thousands of dollars in savings—or additional costs—on an annual basis.

Geographic Differences in State & Local Taxes

High-income residents in New York & California pay ~5X more in taxes than those in Texas

Source: Flippa analysis of IRS data | Image Credit: Flippa

New York and California stand out as the states with the highest state and local taxes for residents earning more than $200,000 per year. High-income households in both states pay around $45,000 in state and local taxes on average, enough to account for more than 7% of the average income among high earners. The average amount of state and local taxes paid in New York—$45,956—is nearly 15 times that of the lowest state, Alaska, where high earners pay an average of just $3,332. And fortunately for residents of the states with the highest earners on average—Wyoming, Florida, and Nevada—each of those states ranks in the bottom half of total average state and local tax payments.

Unsurprisingly, metros in New York, California, and other coastal states like Connecticut and New Jersey lead the nation in taxes paid for high-income households. Ten of the top 12 metros are found in California alone. High earners pay far less in cities in Florida, Texas, and select other states, likely in part due to those states’ lack of personal income tax.

Below is a complete breakdown of state and local taxes paid by households earning more than $200,000 for nearly 400 U.S. metropolitan areas and all 50 states. The analysis was conducted by Flippa—a marketplace for buying and selling digital businesses—using data from the IRS. For more information, see the methodology section.

Full Results

Methodology

The statistics shown are derived from IRS individual income tax data aggregated by the principal residence of filers with $200,000 or more in adjusted gross income for tax year 2020, the most recent year available. As such, the data represents the total amount of state and local taxes paid by residents of each location (regardless of where the tax was actually paid). To determine the locations where high-income residents pay the most in taxes, researchers at Flippa calculated the total amount of state and local taxes paid by high-income filers divided by the total number of high-income filers. These taxes include income, sales, real estate, and personal property taxes.

References

1. U.S. Census Bureau (2023). Quarterly Summary of State & Local Tax Revenue Data Tables. Retrieved on February 15, 2024 from https://www.census.gov/programs-surveys/qtax/data/tables.All.html.
2. Tax Foundation (2022, April 7). State and Local Tax Burdens, Calendar Year 2022. Retrieved on February 15, 2024 from https://taxfoundation.org/data/all/state/tax-burden-by-state-2022/.
3. Missouri Economic Research and Information Center (2023). Cost of Living Data Series. Retrieved on February 15, 2024 from https://meric.mo.gov/data/cost-living-data-series.
4. U.S. Census Bureau (2023). State Population Totals and Components of Change: 2020-2023. Retrieved on February 15, 2024 from https://www.census.gov/data/tables/time-series/demo/popest/2020s-state-total.html.
5. Tax Foundation (2024, January 9). Americans Moved to Low-Tax States in 2023. Retrieved on February 15, 2024 from https://taxfoundation.org/data/all/state/state-population-change-2023/.
6. Center on Budget and Policy Priorities (2023, August 9). State Taxes Have a Minimal Impact on People’s Interstate Moves. Retrieved on February 15, 2024 from https://www.cbpp.org/research/state-budget-and-tax/state-taxes-have-a-minimal-impact-on-peoples-interstate-moves.
7. Internal Revenue Service (2023, October 24). SOI Tax Stats — Statistics of Income. Retrieved on February 15, 2024 from https://www.irs.gov/statistics/soi-tax-stats-statistics-of-income.

Venture capital financing has been a major catalyst for business growth in recent years, particularly through innovations in fields like technology and software. Now-ubiquitous tech companies like Uber and Airbnb got their starts as venture-backed startups within the last 15 years, but the impact of VC investment has flowed into every corner of the economy. As of late, however, high interest rates have pushed venture investors to be more conservative, making it harder for new startups to raise funding and leading to widespread layoffs in many venture-backed companies.

U.S. Venture Capital Investment Growth

Growth in venture funding has dramatically outpaced GDP in recent decades

Source: Flippa analysis of National Science Foundation/Pitchbook data | Image Credit: Flippa

Total annual venture capital investment rose more than tenfold from the start of the Great Recession in 2007 to venture capital funding’s peak in 2021, buoyed by low interest rates during the long recovery from the recession. Over that span, venture capital funding also increasingly outpaced overall GDP growth in the U.S., solidifying itself as a mainstay in the business funding landscape. But from 2021 to 2022—as inflation began to spike and interest rates subsequently began to rise—total VC funding fell by almost half, from $443 billion to $256 billion.

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Trends in U.S. Venture Capital Deal Sizes & Frequency of Investment

While average deal sizes have grown in recent years, they remain below dot-com era highs

Source: Flippa analysis of National Science Foundation/Pitchbook data | Image Credit: Flippa

While overall venture capital investment increased during the last two decades, the size of each investment has remained relatively low compared to historic peaks. During the dot-com era, average deal sizes reached a height of nearly $28 million in today’s dollars but fell off quickly when the bubble burst. Today, the total number of deals completed each year is significantly higher, but while deal sizes have trended upward over the last decade, the average deal size in 2022 was just $10.1 million.

Recent Venture Capital Investment by Company Location

Massachusetts stands out for its VC activity relative to state GDP

Source: Flippa analysis of National Science Foundation/Pitchbook data | Image Credit: Flippa

Venture capital investment is most robust in a select group of states that tend to have strong startup economies, including networks of existing entrepreneurs, a well-educated workforce, and capabilities in high-growth industries. More than half of all venture capital funding flows to just two states: California (40.2%) and New York (12.3%). But on a relative basis, Massachusetts leads the nation with $32,800 in VC funding per $1 million in state GDP. Delaware and Wyoming also rank highly on a per-GDP basis thanks to their business-friendly laws and tax regimes.

Venture Funding Growth by State

Since 2012, Mountain states Wyoming & Idaho experienced the largest VC investment growth

Source: Flippa analysis of National Science Foundation/Pitchbook data | Image Credit: Flippa

Wyoming is also the state that has shown the most rapid growth in VC funding over the last decade. Total VC investment in Wyoming exploded from $10.8 million in 2012 to $792.6 million in 2022, and on a per-GDP basis, the level of VC investment in the state increased by nearly 58 times over that span. Neighboring Idaho ranks second (20.8X increase) while Alaska ranks third (16.8X increase). Each of these states is smaller and tends to have relatively few VC deals compared to other states, which may contribute to the relative impact on GDP.

Below is a complete breakdown of all 50 states. The analysis was conducted by Flippa, a marketplace to buy and sell digital businesses, using data retrieved from the National Science Foundation. For more information on calculations and methods, refer to the methodology section below.

Methodology

The data used in this analysis comes from the U.S. Bureau of Economic Analysis and PitchBook, retrieved from the National Science Foundation’s National Center for Science and Engineering. Researchers at Flippa compared total venture capital disbursed in each state relative to the state’s GDP in both 2022 and 2012 to determine those that experienced the most growth. The data represents venture capital funding secured by companies in each state and includes all stages of financing, from seed to later-stage investments.

References

1. Unemployment Rate | FRED | St. Louis Fed. (n.d.). Retrieved January 29, 2024, from https://fred.stlouisfed.org/series/UNRATE
2. Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over | FRED | St. Louis Fed. (n.d.). Retrieved January 29, 2024, from https://fred.stlouisfed.org/series/LES1252881600Q
3. Personal Consumption Expenditures | FRED | St. Louis Fed. (n.d.). Retrieved January 29, 2024, from https://fred.stlouisfed.org/series/PCE
4. National Center for Science and Engineering Statistics (2023). Retrieved January 29, 2024 from https://ncses.nsf.gov/

Full Results

Many Americans believe that another key ingredient for success is college attainment. Postsecondary education is strongly correlated with better employment outcomes, lower poverty rates, and higher lifetime earnings. However, as college costs have increased in recent decades, the public has become increasingly skeptical about the return on investment of a college degree.

But between the earning potential for business owners and the financial and opportunity costs of college attendance, it’s no surprise to find that more than 7.5 million Americans who own a business never attended college.

Business Owner Educational Attainment Over Time

Amid record-high inflation and tuition, more business owners are forgoing college

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

College education has become more common in the U.S. population over time, which has in turn led to a decline in the share of business owners opting out of a college education. In 2000, nearly half of all business owners—47.2%—had never attended college, but as of 2022, that figure sits at 41.9%. However, after nearly two decades of declines, this trend is showing signs of slowing or even reversing. College costs have risen by more than half since the year 2000, from $17,376 to $26,903, and many college attendees continue to take on significant debt loads to finance their education. At the same time, record inflation in recent years has further strained Americans’ finances, while high interest rates have increased borrowing costs for student loans. As these trends have converged, it makes sense that more business owners are deciding against a college education.

Changes in Educational Attainment by Industry

The share of business owners who never went to college increased in 7 out of the nation’s 10 largest industries

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

College credentials are often a requirement in many industries and occupations, which can close off some of the potential options available for non-college educated business owners and make other fields more desirable. Among the nation’s 10 largest industries (measured by number of business owners), the share of owners who never went to college exceeds 50% in all but three: real estate (23.0%), consulting (8.9%), and legal services (5.1%). Furthermore, the proportion of owners who never went to college increased in seven of these 10 largest industries between 2020 and 2022.

While the statistics pertaining to the nation’s largest industries may not be surprising given their nature, what is more interesting is that these trends are also affecting many unsuspecting sectors. For example, between 2020 and 2022 the concentration of non-college educated business owners increased in a number of tech and finance-related fields, such as design services, securities investing, insurance, advertising, and e-commerce.

Geographical Differences in Business Owner Educational Attainment

States located in the broader Appalachian and Ozark regions have the most business owners who never went to college

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

Business owners without college credentials are also more common in some geographies than in others. The concentration of college-educated business owners in a location tends to correlate with that location’s rates of educational attainment overall. Many of the states with the highest share of non-college business owners are found in parts of the country where fewer people go to college in general. For example, more than half of all business owners in Arkansas (51.6%) forwent college, and the state has the third-lowest rate of college attainment. Similar trends hold for other states in the Appalachian and Ozark regions, including Louisiana, Oklahoma, West Virginia, and Mississippi. In contrast, more educated states tend to have fewer business owners without college experience, led by Colorado where less than one-third (32.8%) of business owners did not attend college.

At the metro level, cities in these regions like Oklahoma City (49.6%), Tulsa (44.4%), and Memphis (43.4%) also tend to have higher shares of business owners who didn’t attend college. But business owners’ rates of college attendance can also vary across metros within regions. For example, the San Francisco metro—known for its high-paying tech industry—has one of the lowest shares of business owners who never went to college, while other California metros including Riverside and Fresno have among the highest.

Below is a complete breakdown of the areas with the most business owners who never went to college across over 240 metros and all 50 states. The analysis was conducted by researchers at Flippa, a global online marketplace to buy and sell online businesses and digital assets, using data from the U.S. Census Bureau. For more information on calculations and methods, refer to the methodology section below.

Large Metros With the Most Business Owners Who Never Went to College

Midsize Metros With the Most Business Owners Who Never Went to College

Small Metros With the Most Business Owners Who Never Went to College

States With the Most Business Owners Who Never Went to College

Methodology

To find the locations with the most business owners who never went to college, researchers at Flippa analyzed the latest data from the U.S. Census Bureau’s 2022 American Community Survey. The researchers ranked metros according to the share of self-employed workers who completed high school or lower. To improve relevance, only business owners with positive income and metropolitan areas with sufficient self-employment populations were included in the analysis.

References

1. The State of Small Business Now. (2023, April 10). U.S. Chamber of Commerce. Retrieved January 15, 2024, from https://www.uschamber.com/small-business/state-of-small-business-now
2. Headd, B. (2021, August). Small Business Facts: The Importance of Business Ownership to Wealth. Small Business Administration. Retrieved January 15, 2024, from https://advocacy.sba.gov/wp-content/uploads/2021/08/Small-Business-Facts-Business-Owner-Wealth.pdf
3. How does a college degree improve graduates’ employment and earnings potential? (n.d.). The Association of Public and Land-grant Universities. Retrieved January 15, 2024, from https://www.aplu.org/our-work/4-policy-and-advocacy/publicuvalues/employment-earnings/
4. ​​Edge Research & HCM Strategists. (2022, September 28). Where Are the Students? Bill & Melinda Gates Foundation. Retrieved January 15, 2024, from https://usprogram.gatesfoundation.org/news-and-insights/articles/gates-foundation-probes-college-enrollment-decline
5. Dorn, E., Dua, A., & Law, J. (2020, April). The rising toll of student debt: More than graduates can sustain? McKinsey & Company. Retrieved January 15, 2024, from https://www.mckinsey.com/industries/education/our-insights/the-rising-toll-of-student-debt-more-than-graduates-can-sustain
6. 2022, Educational Attainment, annual: Bachelor’s degree or higher by state | FRED | St. Louis Fed. (n.d.). Retrieved January 15, 2024, from https://fred.stlouisfed.org/release/tables?eid=391444&rid=330
7. American Community Survey 1-Year Estimates [Data set]. (2022). U.S. Census Bureau. Retrieved January 15, 2024, from  https://www.census.gov/data/developers/data-sets/acs-1year.html

Full Results

But the story is not so simple. Many millennials entered the workforce during or shortly after the Great Recession, when job openings were low and unemployment was high. On top of that, most who attended college experienced dramatic increases in the cost of higher education without proportional rises in wages. More recently, the housing market witnessed exploding costs right as millennials entered peak homebuying age. And while high inflation in the last two years has affected all parts of the economy, younger households have been especially challenged. The economic headwinds facing millennials have meant that members of the generation have, in many respects, fallen behind previous generations in reaching life milestones and creating wealth.

These challenges extend to millennial entrepreneurs. With more personal debt, lower savings and wealth, and other financial difficulties, millennials who are interested in starting or owning a business have more barriers to overcome before doing so.

Millennial Business Owner Income Over Time

Millennial business owners have historically earned less than the average business owner

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

Among business owners, millennials have tended to bring in below-average income. According to the latest Census Bureau data, the average income of all American business owners surpasses that of millennial business owners by roughly $14,000. This discrepancy is partly linked to the younger age of millennials, resulting in newer and less established businesses. However, there’s a positive trend: over time, this gap has diminished. While the income of all business owners has remained relatively steady since 2009, millennial business owners have seen a significant increase, more than doubling from $30,064 to $62,914 during that period.

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Business Owner Income Differential by Generation

Baby Boomer business owners earn significantly more than their employee counterparts

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

Millennial business owners lag behind older business owners not just in income overall but in income relative to non-business owners. A typical baby boomer who owns a business earns nearly 20% more than one working as an employee, while for Generation X, a typical business owner earns 4.7% more than an employee. For millennials, however, the difference between business owners and employees is just 1.1%—around just $700 per year.

Millennial Business Owner Income by Location

Millennial business owners in North Dakota earn the most compared to their employee counterparts

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

For millennials in some parts of the country, however, business ownership can prove much more lucrative than working as an employee. In North Dakota, the typical millennial business owner earns more than twice what their employee counterparts do, and in other states like Nebraska (+63.6%), Mississippi (+40.4%), and Kansas (+38.9%), business owners maintain a substantial earning premium. But in 16 states, millennial business owners earn less than millennial employees, including Wyoming (-27.3%), Connecticut (-25.3%), and Massachusetts (-16.0%).

One factor that may impact the income differential is the quality of jobs available for employees. At the metro level, some of the locations with the most favorable differential for employees are full of jobs with generous pay, like finance jobs in Bridgeport, CT (-33.5% differential for business owners) or tech jobs in San Francisco (-33.2%). The cities that have the best differential for millennial business owners are locations where higher-paying industries are not as well established, lowering the opportunity costs for potential entrepreneurs.

Below is a complete breakdown of the areas with the most successful millennial business owners across the top 100 metros and all 50 states. The analysis was conducted by researchers at Flippa, a global online marketplace to buy and sell online businesses and digital assets, using data from the U.S. Census Bureau. For more information on how each statistic was computed, refer to the methodology section below.

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Methodology

To find the locations with the most successful millennial business owners, researchers at Flippa analyzed the latest data from the U.S. Census Bureau’s 2022 American Community Survey. The researchers ranked metros according to the difference between the average income for self-employed and employee millennials. Millennial workers were those individuals ages 26 to 41 in the year 2022 who worked and earned income in the prior 12 months. To improve relevance, only the top 100 metropolitan areas by population were considered for the analysis.