Every year since 2017, venture capital firm M25 has released an annual ranking of the best cities in the Midwest for startups.
And while some may argue against Pittsburgh's inclusion as a Midwestern city, it is included in the rankings.
This year, Pittsburgh maintained its spot in the top five, however, it gave up its No. 3 spot, which it has held since the list began, to Indianapolis, dropping to No. 4. It was the biggest shake-up in the top 10 between 2021 and 2022.
The rankings analyze data in 27 variables across three major categories: startup activity, which factors in the number of startups in a city, exits and other big outcomes such as capital raises; access to resources, which considers talent, investor presence, accelerators and incubators and government; and business climate, which includes costs and demographics. The categories are weighted at 40.5%, 42.5% and 17%, respectively.
Pittsburgh’s overall score was 26.4, compared to Indianapolis which scored a 26.8. Pittsburgh had particularly strong scores for the number of active startups (38.5), the number of exits in the last three years (40.6), its university ecosystem (39.7) and the total amount of venture capital invested over the past five years (42.1).
Pittsburgh’s scores lagged in areas such as the number of big exits and capital raises exceeding $50 million (15.9), the average tenure and two-year retention rate of developers (15.5), the number of Small Business Administration loans issued in 2021 (13.2), median annual salary (12.9) and the distance to the nearest major airport and its number of nonstop flights (12.3).
Rounding out the top five cities were Chicago at No. 1, Minneapolis at No. 2 and St. Louis at No. 5. Chicago scored a 48.4, minting 12 unicorns in 2021. In total, 59 cities were included in the ranking.
