Women looking to launch a startup — and get the funding they need for it — might find Arizona 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 Grand Canyon State No. 4 in the nation for female entrepreneurs, which was a five-point jump from its spot on the list last year.
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 female-founded and co-founded companies, percent of startups still active after one year, state income tax rates and unemployment rates. The first five categories were weighted the heaviest.
The report attributed Arizona’s overall position on the list to its third-place ranking in the metric of women-led businesses, at 30%. Besides that, Arizona made a strong showing across the board, the report said.
“Like years past, Arizona shines for its consistency — ranking no lower than the top 20 for any metric other than unemployment (34th),” the report said. “In Arizona, 20.41% of employees are led by a woman (15th), and the state ranks 16th in the nation for average income ($52,972).”
Coming in ahead of Arizona on the list were No. 1 Colorado, No. 2 Washington and No. 3 California. Texas rounded out the top five.
The Merchant Maverick report showed that states in the West and South made noticeable gains this year. With Wyoming joining the top 5 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.
Although the report found that female-founded or co-founded startups received 15% less in venture capital funding during 2022. That said, that figure were 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.
Arizona was No. 17 for venture investment into female-led startups over the past five years. But the report’s authors offered a warning that those venture capital investments were “significantly lower” than in past years and if the trend continued, Arizona could fall in the rankings.
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, meaning Arizona’s dip was not out of line with what was being seen elsewhere. 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 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.
