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Houston named among the best large cities for early-stage startups

Houston came in at No. 5 for best cities — with populations of more than 1 million residents — for startups. Photo by Tim Leviston/Getty Images

When it comes to cities with over a million residents, Houston's at the front of the pack, according to a new study. But, there's a catch.

Last month, Commercial Cafe rounded up the 20 top cities for early-stage startups and entrepreneurs, and Houston missed the list. Now, the commercial real estate blog has broken down the data into three top ten lists based on city size, and Houston has claimed the No. 5 spot on the list of cities with 1 million or more residents.

The study took into account education, affordability, startup financial success (calculated from Kickstarter data), millennial population growth, among other aspects. Houston in particular was called out for being the most affordable major metro and for having the third best startup survival rate.

"The city is home to the fourth-largest percentage of millennial residents out of the total population, and saw the fourth-largest growth in number of millennial residents," the report reads. "Houston ranked fifth in group for the share of population holding a bachelor's degree or higher in a tech discipline. The rate at which the number of such residents has increased placed Houston seventh for tech education growth."

Outpacing Houston on the larger cities were Dallas at No. 1, San Diego, California, at No. 2, San Jose, California, at No. 3, and Los Angeles at No. 4. San Antonio also made the list, coming in at No. 7.

Texas cities were sprinkled throughout the two smaller cities list. Austin came in at No. 1 for the cities with 500,000 to 1 million residents, as well as claimed the top spot in the best cities regardless of population. Fort Worth ranked as No. 10 on this mid-sized city list.

On the small cities list for metros with less than 500,000 residents, Arlington came in at No. 6 for its location and startup density. The city also made the top 20 regardless of size, sliding into the No. 19 spot. Dallas, which topped the large cities list, came in at No. 15 on the size agnostic list for top startup cities.

Recently, Texas was named a top city to start a company by personal finance website, WalletHub, based on similar statistics.

"[I]t's clear why Texas would come in at No. 1," Susan Davenport, senior vice president of economic development for the Greater Houston Partnership, says responding to that study. "These are all areas where the Lone Star State consistently excels and why Texas continues to attract both entrepreneurs and existing companies across industry sectors."

Most of Houston's smartest ZIP codes surround the Texas Medical Center. Photo by Dwight C. Andrews/Greater Houston Convention and Visitors Bureau

The Houston area is bursting with brain power. Three ZIP codes in the region are home to the biggest share of Texans who've earned a master's, professional, or doctoral degree, according to a new list from UnitedStatesZipCodes.org. And that, according to one economic development executive, is a boon to Houston's workforce.

Houston's 77030 ZIP code, which houses the Texas Medical Center, sits atop the new ranking. There, more than half (51.7 percent) of adults 25 and over, or about 3,800 people, hold a postgraduate or professional degree. As a whole, 12 percent of adults in the Houston metro area have a postgraduate or professional degree, according to the Greater Houston Partnership.

The postgraduate category includes PhDs and MBAs, while the professional category includes JDs (law degrees) and MDs (medical degrees).

"When deciding where to live, neighborhoods full of residents with postgraduate degrees are … increasingly attractive," reads UnitedStatesZipCodes.org, which based its ranking on U.S. Census Bureau data. "Well-educated communities — full of leaders in technology, medicine, business, and more — can bring new industries and revenue."

Ranking second on the list of brainiest Texas ZIP codes is Houston's 77005, where 48.5 percent of adults (or about 8,600 people) hold a postgraduate or professional degree. This ZIP code, which neighbors the 77030 ZIP code, includes the Rice campus. Also, it's presumably home to a lot of highly educated Rice professors and Texas Medical Center doctors.

Directly to the west of the 77030 ZIP is Bellaire — 77401 — which appears at No. 3 in the ranking. In the 77401 ZIP code, 47.6 percent of adults (or nearly 6,300 people) have earned a postgraduate or professional degree; it, too, is likely packed with Rice University professors and Texas Medical Center doctors.

Susan Davenport, senior vice president of economic development at the Greater Houston Partnership, says the region's two top-tier schools — Rice and the University of Houston — along with the region's more than 40 other four-year and two-year schools contribute to Houston's collective brain trust. So do two nearby schools: the University of Texas at Austin and Texas A&M University in College Station.

"More broadly, we are an attractive market for educated professionals from across the country, especially compared to leading East or West Coast cities, because of our lower cost of living, affordable housing prices, and strong economy," Davenport says.

"This creates a virtuous cycle: Companies move to or expand in Houston because they want access to this talent," she adds, "and leading talent moves here because they want to work for these companies and institution."

Davenport says initiatives like the Innovation Corridor, the TMC3 research campus and The Ion entrepreneurship hub also help nurture a well-educated workforce.

"We anticipate these projects will attract even more of the world's brightest minds to our region," she says.

Three other Houston ZIP codes made the top 10 in Texas:

  • No. 5 — 77098 (39.2 percent). That percentage represents about 4,300 people. This ZIP code is just northwest of the Rice and Texas Medical Center campuses.
  • No. 6 — 77025 (39.15 percent). That percentage represents almost 8,200 people. This ZIP code is just southwest of the Rice and Texas Medical Center campuses.
  • No. 10 — 77024 (35.4 percent). That percentage represents about 9,400 people. This ZIP code is slightly east of the Energy Corridor.

"It is no surprise that top-flight, innovation-focused talent would flock to neighborhoods near downtown, Uptown and the world-renowned Texas Medical Center," Davenport says.

Other Texas ZIP codes in the top 10 for postgraduate or professional degrees are:

  • No. 4 — 78703, Austin (41.5 percent). This ZIP code, less than two miles west of the University of Texas campus, includes high-end neighborhoods such as Tarrytown and Old West Austin.
  • No. 7 — 75205, Dallas (37.7 percent). The Southern Methodist University campus sits on the east side of this ZIP code.
  • No. 8 — 78746, Austin (37.2 percent). This ZIP code encompasses parts of West Austin, as well as the wealthy suburbs of Rollingwood and West Lake Hills.
  • No. 9 — 78731, Austin (37.1 percent). This ZIP code incorporates part of Central Austin and a large swath of Northwest Austin.

Federal data shows the unemployment rates for people with master's, professional, and doctoral degrees are lower than for other groups, such as people whose bachelor's or associate's degrees are their most advanced degrees. In addition, people with a postgraduate or professional degree typically earn more money.

"Graduates with the right knowledge and skills have the ability to demand higher salaries, as they are equipped to make significant contributions to the revenue and growth of the companies they work for," the Digital Marketing Institute says.