Women looking to launch a startup — and get the funding they need for it — might find Texas one of the best places to do so.
A recent analysis by small business data and services company Merchant Maverick, called Best States for Women-led Startups, ranked the Lone Star State No. 5 in the nation for female entrepreneurs, though that was down two spots from last year's No. 3 ranking.
The analysis looked at data in all states across eight metrics: percentage of employer firms led by women, percent of employees at women-led firms, percent of women who own businesses, average income of women business owners, venture capital invested into companies founded and co-founded by women, percent of startups still active after one year, state income tax rates and unemployment rates. The first five categories were weighted the heaviest.
With no income tax, Texas performed the best in that category, tying for No. 1 with six other states. Texas also ranked highly — at No. 4 — for the $6.1 million of venture capital invested into companies founded and co-founded by women in the state.
However, the state's 4% unemployment rate — No. 36th nationwide — and relatively low rate of female business ownership — 1.42%, ranking No. 29 nationwide — are keeping Texas out of the top three overall spots, the report states.
Coming in ahead of Texas on the overall list were No. 1 Colorado, No. 2 Washington, No. 3 California and No. 4 Arizona.
The Merchant Maverick report showed that states in the West and South made noticeable gains this year. With Wyoming joining the top five cities, more than half of the top 10 on the list were west of the Mississippi River, and no states from the Northeast made the top 10.
The report found that startups founded or co-founded by women received 15% less in venture capital funding during 2022 than the year before. That said, the figure was affected by the fact that venture capital funding in 2021 was massive. Also, 2022 saw the second-highest amount of venture capital funding for female-founded companies on record, with $36.3 billion allotted through October, the report said.
In a separate report issued October, Pitchbook also emphasized what an anomaly 2021 was for venture capital and said VC funding for women-led startups was down nationwide. At the time, Pitchbook said women-led startups were expected to raise more VC money than in any year before 2021.
Data for the Merchant Maverick analysis was pulled from the U.S. Census Bureau's 2020 Annual Business Survey and 2021 American Community Survey, PitchBook's U.S. VC Female Founders Dashboard, the Kauffman Indicators of Entrepreneurship, Tax-Rates.org, and the U.S. Bureau of Labor Statistics.
