We are living in a time period where the GDP growth rate is at 0.8% per annum. Compare this to the 1950-1973 period when the GDP growth rate was at 2.4%. It was a golden period for growth. With 2.4% growth rate, it takes 28 years to double GDP per head1. With 1.76% growth rate, it takes 40 years to double GDP per head. At the current rate of 0.8%, it will take many decades to double GDP per head. A way to accelerate growth is through encouraging entrepreneurship and developing a robust venture capital ecosystem to fund innovative entrepreneurial ideas. In this blog, I develop a metric, measure and analyze the current entrepreneurship and investment scenario across all the states in the nation.
If everyone is in a comfort zone and focuses on doing predictable tasks in a predictable manner, it sets a complacency mode. This is sustainable in the short run. However, in the long run it leads to lesser growth and opportunities. Disruption and Innovation is required to make us consistently aim for that ‘one’ step above the comfort level. By being so, we stay innovative, competitive and most importantly propel the type of growth that will create plenty of opportunities and jobs for us and for the next generation.
We are now in a time period with a low GDP growth rate of 0.8% per annum. The primary reason cited for this slow growth rate is that there has not been a significant innovation like electricity or internal combustion engine that propelled a GDP growth rate of 2.4% per annum from 1950 to 1970. There has been innovation in computing technologies in the 1970s and 1980s which increased growth rate from 1994 to 2004 but after this period the growth rate came down to 0.8%. What this low growth rate means is that it will take about 60 years to double GDP growth rate per annum. These data show that innovation is important to build a prosperous world.
To be disruptive and innovative, we need both people and capital. Having just one of them doesn’t yield results. They both have to go hand-in-hand. People have to be entrepreneurial to come up with ideas and reach out for capital and investments to test the feasibility of those ideas and then research and develop to bring new products and services to the market. Having such an environment which has both innovation and investment is crucial for growth and this made me think about coming up with metrics or an indicator to quantitatively measure them.
We have per capita income as an indicator to assess the economic well-being of a country/region. A similar metric or an indicator will help to assess the innovation ecosystem in a country/region. Thinking on these lines, I thought ‘per capita entrepreneurship’ can be a useful metric. In this blog, I share how this metric is developed and can be used for analysis.
Methodology
For per capita entrepreneurship (PCE), I collected data on two sets of information:
- venture capital deal volumes and deal sizes for all the states. This data was available on the StatsAmerica website2. The source data at this website was taken from National Venture Capital Association Pitchbook. The data was processed and available on the StatsAmerica website. This dataset had information on deal volume and deal sizes from 2012 to 2025. All deal sizes were adjusted to 2024 dollars which makes it convenient for trend analysis and comparisons across time periods.
- The 18-65 age population in each state. This is the population that will be actively engaged in higher education or will be in the workforce. I arrived at this information based on data available on the US Census data website3. The US Census bureau website had datasets of civilian population estimates for each age for each calendar year. I processed the datasets to get the population estimates for 18-65 population for the years 2012 to 2024. I used the 2024 population for the year 2025 too.
From these two sets of data, I arrived at per capita entrepreneurship PCE for each state. I summed up the deal sizes for all years from 2012 to 2025. I summed up all the populations from 2012 to 2025. Dividing the former over the latter gave the per capita entrepreneurship PCE. Higher the PCE the more innovative and entrepreneurial the state is.
Results, Analysis and Discussion
Per-Capita Entrepreneurship
Below is the table of PCE by state sorted by decreasing value. The rank is provided alongside in a separate column. Rank 1 is for the state which has the highest PCE.
| State | PCE | Rank |
| Massachusetts | $238.13 | 1 |
| California | $229.40 | 2 |
| Delaware | $145.74 | 3 |
| District of Columbia | $110.59 | 4 |
| New York | $109.95 | 5 |
| Colorado | $70.72 | 6 |
| Utah | $63.11 | 7 |
| Washington | $60.82 | 8 |
| Connecticut | $41.92 | 9 |
| Vermont | $34.23 | 10 |
| Montana | $30.72 | 11 |
| Minnesota | $29.32 | 12 |
| Illinois | $28.51 | 13 |
| North Carolina | $28.02 | 14 |
| Texas | $26.40 | 15 |
| Maryland | $26.27 | 16 |
| Nevada | $24.99 | 17 |
| Pennsylvania | $24.55 | 18 |
| New Jersey | $24.12 | 19 |
| Oregon | $23.16 | 20 |
| Virginia | $21.24 | 21 |
| New Hampshire | $21.17 | 22 |
| Arizona | $21.07 | 23 |
| Florida | $20.48 | 24 |
| Georgia | $20.11 | 25 |
| Wyoming | $18.09 | 26 |
| Tennessee | $15.65 | 27 |
| Rhode Island | $13.68 | 28 |
| Nebraska | $13.05 | 29 |
| Kansas | $12.05 | 30 |
| Ohio | $11.92 | 31 |
| Missouri | $11.50 | 32 |
| New Mexico | $8.44 | 33 |
| Idaho | $8.17 | 34 |
| Maine | $8.15 | 35 |
| Michigan | $8.05 | 36 |
| Indiana | $7.71 | 37 |
| Wisconsin | $6.63 | 38 |
| North Dakota | $6.30 | 39 |
| Hawaii | $6.03 | 40 |
| Arkansas | $5.35 | 41 |
| Kentucky | $5.02 | 42 |
| Alabama | $4.38 | 43 |
| Iowa | $4.37 | 44 |
| South Carolina | $3.97 | 45 |
| Oklahoma | $3.91 | 46 |
| Alaska | $2.79 | 47 |
| South Dakota | $2.14 | 48 |
| Louisiana | $2.10 | 49 |
| Mississippi | $1.10 | 50 |
| West Virginia | $0.72 | 51 |
This table shows the top 10 states based on PCE are Massachusetts, California, Delaware, District of Columbia, New York, Colorado, Utah, Washington, Connecticut, Vermont in the given order. The bottom 10 states based on PCE are West Virginia, Mississippi, Louisiana, South Dakota, Alaska, Oklahoma, South Carolina, Iowa, Alabama, Kentucky in the given order. Indiana ranks 37th in the nation with a PCE of $7.71 which means each person in the age group 18-65 is generating $7.71 as venture capital to drive entrepreneurship-disruption-innovation in the state.
We are aware states such as Massachusetts, California, New York draw high volumes of Venture Capital funds. So the deal sizes as such would have been enough to infer the states with high volumes of Venture capital funds. But my reasoning was these states have higher populations and hence may also be winning higher funds. There may be some states with lesser populations and may still be getting venture capital funds higher in proportion for its population size. Hence I removed the effect of population size by having a measure which is given by unit population and which is why the PCE was calculated. To contradict my assumption, Massachusetts, California, and New York still come up in the top 5 for PCE. However Utah comes in Rank 7 with just 2+ million population (30th in 18-65 population size) which shows it as a top entrepreneurial/innovation-driven state. If the deal sizes alone were used, it had won $23.9b funds and would have come in the 13th place. Montana is showing ahead of states like Illinois, Texas, Maryland and such.
Trend Analysis
PCE averages the data over the past 15 years. But there may be states which are showing a gradual trend of growth in Entrepreneurship or showing a recent trend maybe after covid pandemic or AI boom. For these reasons, it will be interesting to observe the trend in deal sizes over the past years.
Below is the table with CAGR in deal sizes from 2012 to 2024 in descending order of CAGR:.
| State | CAGR (From 2012 to 2024) |
| Alabama | 100.32% |
| Nebraska | 58.05% |
| Washington | 56.83% |
| Vermont | 27.78% |
| Delaware | 24.77% |
| South Dakota | 22.44% |
| Wyoming | 18.93% |
| Arkansas | 17.87% |
| New York | 15.71% |
| New Mexico | 15.27% |
| Nevada | 15.18% |
| Louisiana | 14.55% |
| Florida | 12.71% |
| Montana | 12.40% |
| California | 12.21% |
| South Carolina | 11.26% |
| Idaho | 11.24% |
| Indiana | 10.89% |
| North Carolina | 10.08% |
| Kansas | 9.75% |
| Colorado | 9.27% |
| Missouri | 8.52% |
| Connecticut | 8.51% |
| Illinois | 8.20% |
| Iowa | 8.07% |
| Massachusetts | 7.83% |
| District of Columbia | 7.29% |
| Virginia | 7.20% |
| Maryland | 7.00% |
| Minnesota | 6.86% |
| New Jersey | 6.55% |
| Arizona | 6.49% |
| Texas | 6.45% |
| Wisconsin | 5.58% |
| Pennsylvania | 5.40% |
| Kentucky | 4.99% |
| Hawaii | 4.72% |
| Michigan | 4.34% |
| Georgia | 4.33% |
| Utah | 4.14% |
| Maine | 3.92% |
| Oklahoma | 3.70% |
| Mississippi | 3.56% |
| Tennessee | 3.35% |
| Rhode Island | 3.09% |
| Oregon | 2.66% |
| Ohio | 0.33% |
| North Dakota | -2.08% |
| Alaska | -2.12% |
| New Hampshire | -5.72% |
| West Virginia | -16.82% |
Based on the above CAGR table, the states of Alabama, Nebraska,Washington have had an impressive CAGR over the past 12 years. They have had gradual and consistent increases in Venture capital funding. States at the bottom of the table are going through decreasing growth in Venture capital funding.
A few states have had a peak in funding around the years 2020, 2021, 2022. Further research can provide details for those peaks . A few states – Colorado, District of Columbia, Florida, Georgia, Illinois, Indiana, Massachusetts, Mississippi, Missouri, Nebraska, Nevada, New York, Pennsylvania, Texas and Tennessee (recently showing high magnitudes of venture deals) have had peaks in venture capital deals in the beginning of this decade. Trend analysis has thrown up a few new directions for further analysis and investigations.
Conclusion
Disruption and Innovation is imperative at this time period as we are going through a low GDP growth rate. Driving Innovation, Entrepreneurship and Venture Capital Funding has the potential to drive up growth. Having a few metrics to measure them will aid us to understand and act better. Per-capita Entrepreneurship provides an overview of the Entrepreneurship and Venture Capital scenario across the different regions/states in the nation. Analysis of data with PCE is showing Alabama, Utah, Nebraska, Nevada, Montana as promising states for Entrepreneurship apart from the VC favorite states of California, Massachusetts, New York. Trend Analysis of the data is providing directions for further analysis and I am intrigued to undertake them and share the analysis in my future articles.
Bibliography
1. Good Economics for Hard Times by Abhijit V. Banerjee, Esther Duflo
2. StatsAmerica – https://www.statsamerica.org/sip/Economy.aspx?ct=S18
3 US Census data – https://www.census.gov/data/datasets/time-series/demo/popest/2020s-state-detail.html
Leave a Reply