Is Texas a top state for business? New reports find mixed results

by the numbers

When it comes to Texas being a top state for business, we guess the jury's out. Photo via Getty Images

Texas economic development boosters are crowing about a new top-in-the-nation ranking. But they’re probably frowning about a different business ranking that’s mediocre.

First, the good news.

Business Facilities magazine just named Texas the 2023 State of the Year in recognition of its business climate, economic development leadership, and “blockbuster” year for capital investment and job creation. It’s the fifth time that Business Facilities has crowned Texas as the top state.

“Texas moves at the speed of business,” Gov. Greg Abbott said in a news release. “As recognized by Business Facilities magazine, Texas leads the nation for corporate relocations, business expansions, and job creation.”

“With the best business climate in the nation, leading investments in education and workforce development, and our young, skilled, diverse, and growing workforce, Texas is poised to lead the nation in 2024,” the governor added.

Additionally, Texas again appears on WalletHub's annual list of "Best States to Start a Business" — but ranks lower than last year. The Lone Star State ranked No. 8 this year compared to last year's No. 3 spot. This ranking looked at business environment, access to resources, and business costs across 25 relevant metrics by analyzing data from U.S. Census Bureau, Bureau of Labor Statistics, and other resources.

Now, the not-so-good news.

Texas landed at No. 32 on Forbes Advisor’s new list of the best states to start a small business in 2024. The Lone Star State received especially low marks economy, workforce, and business climate, but fared better in two other categories: business costs and financial accessibility.

Topping the Forbes Advisor list was North Dakota, followed by Indiana, Arkansas, South Dakota, and North Carolina.

Texas recently was awarded three other No. 1 business climate rankings, though: Best Business Climate in the U.S. by Business Facilities in June, Best Business Climate in the U.S. by corporate executives in September, and Top Business Climate in the U.S. by Site Selection Magazine in November.

“In a state the size of Texas, business is not just finding a home in the metros. A laser focus by economic developers across the state to foster established businesses as well as innovative startups is paying off for communities of all sizes,” Anne Cosgrove, editorial director of Business Facilities, says in a news release.

The magazine covers corporate site selection and economic development.

Other contenders for 2023 State of the Year were:

  • Arizona
  • Florida
  • Georgia
  • Indiana
  • Missouri
  • Nevada
  • North Carolina
  • Tennessee
  • Utah
  • Virginia
Texas has been known for ages as a business-friendly state, but one recent report suggests it might be falling from grace. Photo via Getty Images

Texas' business friendliness gets mixed reviews from 2 recent reports

lone star standings

It’s a tale of two views of Texas’ business-friendly reputation. For the first time ever, the Lone Star State has fallen out of the top five in CNBC’s annual ranking of the best states to do business. Meanwhile, Texas tops Business Facilities’ new ranking of the best state business climates.

On July 11, CNBC released the 2023 edition of its ranking of the top states for doing business. The ranking puts Texas at No. 6, leaving the Lone Star State out of the top five for the first time since CNBC launched its study in 2007. Texas appeared at No. 5 in 2022 and No. 4 in 2021. The state finished first in 2008, 2010, 2012, and 2018.

For the second consecutive year, North Carolina leads the CNBC ranking, thus “solidifying its position as an economic powerhouse,” according to the Economic Development Partnership of North Carolina.

Despite dropping out of the top five, CNBC acknowledges that Texas remains an economic powerhouse.

Texas grabs CNBC’s No. 2 spot, behind Florida, for the best state economy. And the state witnessed year-over-year job growth of four percent through May, the highest rate of any state. Furthermore, Texas ties with California for access to capital, the study says, and snags the No. 2 spot in the workforce category.

Texas’ fall this year includes a slide from No. 15 to No. 24 in the infrastructure category. CNBC mentions the 2021 wintertime collapse of the state’s electric grid in its explanation of the nine-spot drop.

Other knocks against Texas:

  • A decline from No. 21 to No. 35 in the education category.
  • A dip from No. 12 to No. 16 in the cost-of-doing-business category.
  • A plunge from No. 14 to No. 22 for cost of living.
  • A bottom-of-the-barrel ranking in the life, health, and inclusion category, down from No. 49 last year.

In an email to CNBC, an unnamed spokesman for Gov. Greg Abbott shrugged off this year’s sixth-place showing.

“People and businesses vote with their feet, and continually they are choosing to move to Texas more than any other state in the country,” the spokesman wrote.

The spokesman cited the state’s national lead in job creation, attracting more than 280 new corporate headquarters since 2015, and its status as a perennial front-runner in economic development projects.

“Texas remains number one because people and businesses are choosing our state over any other for the unmatched competitive advantages we offer: no corporate or personal income taxes, a predictable regulatory climate, and a young, skilled, diverse, and growing workforce,” the spokesman wrote.

While Texas didn’t fare as well in this year’s CNBC study, it can brag about its 2023 designation as Business Facilities magazine’s state with the best business climate. In second place: North Carolina.

“The strength and sustained momentum of the Texas economy made the state a clear choice for [No. 1] in this year’s rankings,” Anne Cosgrove, editorial director of Business Facilities, says in a June 26 statement. “Taking the top spot this year is based not only on the impressive capital investment and job creation numbers, but also for diversity of industries, robust infrastructure, and a business-friendly regulatory and tax climate.”

Abbott took the opportunity to publicize the No. 1 ranking from Business Facilities.

“When businesses succeed, so do Texans — and our business climate ensures that Texas continues to offer world-class educational opportunities, good-paying careers to support families, and endless possibilities to prosper,” Abbott says in a news release.

Houston's moving on up in the worlds of economics and startup activity. Photo by Tim Leviston/Getty Images

Houston ranks high on lists for startup ecosystems and economic growth potential

We're No. 4!

The number four appears to be a sign of good fortune for Houston.

A new ranking from Business Facilities magazine places Bayou City at No. 4 for economic growth potential among large metro areas and at No. 4 for the country's best startup ecosystems.

Regarding the No. 4 ranking for economic potential, Susan Davenport, senior vice president of economic development for the Greater Houston Partnership, says Houston's industrial diversity has helped the region weather downturns in certain economic sectors "and now has us on a solid growth trajectory."

"The region's steady population increases, coupled with our relatively low costs of living and doing business, bode well for our economic growth potential reflected in this ranking," Davenport says.

Houston's status as the one of the top locations for Fortune 1000 headquarters in the U.S. elevates the region's position as a hub where both large and small companies can prosper, she adds.

Houston appeared at No. 1 in Business Facilities' 2018 ranking of the top large metros for economic growth potential. Representatives of Business Facilities couldn't be reached to explain why Houston dropped three places from 2018 to 2019.

Last year, the magazine pointed out that Houston's economy extends far beyond its standing as the Energy Capital of the World.

"The nation's fourth-largest city has a dynamic, diversified economy that is brimming with innovation, technology, and entrepreneurship," said the magazine, citing advantages such as Houston's strong manufacturing base, enormous healthcare presence, and storied aerospace legacy.

The magazine went on to hail Houston's "distinctly favorable business climate."

"The region benefits from a skilled workforce, world-class infrastructure and transportation system, and a pro-business environment that stimulates rather than stifles business growth," Business Facilities noted.

As for the No. 4 ranking in this year's Business Facilities startup category, Davenport says this indicates the recent work of the Houston Exponential initiative to foster the local startup environment is paying off.

Houston Exponential, established in 2017, seeks to make Houston a top 10 innovation ecosystem, generate $2 billion in venture capital annually, and create 10,000 new tech jobs a year by 2022.

Last October, Houston Exponential announced it had collected $25 million for its first venture capital fund. Making financial commitments to the fund were Insperity, Chevron, Shell, Quanta Services, Westlake Chemical, The Plank Cos., PROS, H-E-B, and Camden Property Trust.

"Factor in the demand being satisfied by a number of new incubators and accelerators, plus the four-mile Innovation Corridor running through the heart of the city and anchored by The Ion, and we're seeing momentum on a scale like never before," Davenport says.

In Houston's Midtown, Rice University is transforming the historic Sears building into The Ion, which will serve as an innovation hub designed to cultivate collaboration among startups, corporations, universities, and other elements of the local business community. It's the first development in Houston's evolving innovation district.

"The Midtown innovation district is an embodiment of our shared community vision to give professionals and families a means of seizing opportunity as Houston continues to grow as a leading city in technology," says Matt Thibodeaux, executive director of Midtown Houston.

Here is Business Facilities' 2019 list of the top 10 places for economic growth potential among large U.S. metros:

  1. Atlanta
  2. San Antonio
  3. Phoenix
  4. Houston
  5. Orlando, Florida
  6. Austin
  7. Raleigh-Durham, North Carolina
  8. Las Vegas
  9. Albuquerque, New Mexico
  10. Kansas City, Missouri

Here is Business Facilities' 2019 list of the 10 places with the best startup ecosystems in the country:

  1. Austin
  2. Denver
  3. New York City
  4. Houston
  5. San Jose, California
  6. Orlando, Florida
  7. Nashville, Tennessee
  8. Atlanta
  9. Raleigh-Durham, North Carolina
  10. Salt Lake City
"The Houston of today looks like the United States of tomorrow," says Susan Davenport, senior vice president of economic development at the Greater Houston Partnership. Photo by Zview/Getty Images

Houston deemed one of the top 'Cities of the Future' in North America

Bragging rights

Watch out, world. Here comes Houston.

Houston ranks fifth on a new 2019-20 list of the 10 North American Cities of the Future produced by the fDi Intelligence division of the Financial Times. New York grabbed the No. 1 spot, followed by San Francisco, Toronto, and Montreal. Following Houston were Chicago; Boston; Los Angeles; Palo Alto, California; and Seattle.

The ranking is based on data in five categories:

  • Economic potential
  • Business friendliness
  • Human capital and lifestyle
  • Cost effectiveness
  • Connectivity

Susan Davenport, senior vice president of economic development at the Greater Houston Partnership, says Houston's "ethnically and culturally diverse population" coupled with its "robust and globally connected economy" help form a solid foundation for the city's future.

The North American Cities of the Future ranking is certainly not the only such accolade that Houston has garnered. Hailing Houston as "the American city of the future," Resonance Consultancy, a consulting firm, ranks Houston the 11th best large city in the U.S.

"Positive rankings and recognition like this help us continue to attract the best and brightest minds both domestically and around the world," Davenport says. "Houston has long been a place that solves the world's most complicated problems — from putting humans on the moon to pioneering open-heart surgery. But we make a conscious choice to measure ourselves not on past accomplishments but on what we do next."

Davenport cites Houston's vibrant startup scene, 21 Fortune 500 companies, and burgeoning innovation corridor, along with the presence of the world's largest medical complex, as helping position the city for economic growth.

She also mentions the fact that nearly one-fourth of local residents are foreign-born and that more than 145 languages are spoken. In April 2019, personal finance website WalletHub named Houston the most diverse city in the U.S.

"In short, the Houston of today looks like the United States of tomorrow," Davenport says.

In a March 2019 report, the Center for Houston's Future noted that Houston's economic growth — namely in the construction, healthcare and IT sectors — depends heavily on the continued influx of immigrants. Immigrants already make up nearly one-third of the region's workforce, the report says.

Between 2016 and 2036, almost 60 percent of all jobs added in the region will be filled by foreign-born workers, the report indicates.

Also on the international front, more than 5,000 Houston companies do business abroad, Davenport says, and more than 500 foreign-owned companies have invested in Houston in the past decade.

As Houston looks toward the future, business leaders will continue to diversify the economy through such sectors as life sciences, advanced manufacturing, and technology, according to Davenport. In addition, business leaders will keep driving the transition from traditional fossil fuels to "new energy" sources (like wind and solar), she says.

"Houston's future is a bright one," Davenport says. "Our young and well-educated workforce, coupled with targeted infrastructure investments, will help us become a hub for innovation in the years ahead."

Business Facilities magazine agrees with that assessment. In July 2018, it ranked Houston the No. 1 metro area for economic growth potential, stressing that the region's economy has expanded beyond Big Oil and that it's brimming with "innovation, technology, and entrepreneurship."

"Houston has a distinctly favorable business climate. The region benefits from a skilled workforce, world-class infrastructure and transportation system, and a pro-business environment that stimulates rather than stifles business growth," the magazine says.

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Texas booms as No. 3 best state to start a business right now

Innovation Starts Here

High employment growth and advantageous entrepreneurship rates have led Texas into a triumphant No. 3 spot in WalletHub's ranking of "Best and Worst States to Start a Business" for 2026.

Texas bounced back into the No. 3 spot nationally for the first time since 2023. After dropping into 8th place in 2024, the state hustled into No. 4 last year.

Ever year, WalletHub compares all 50 states based on their business environment, costs, and access to financial resources to determine the best places for starting a business. The study analyzes 25 relevant metrics to determine the rankings, such as labor costs, office space affordability, financial accessibility, the number of startups per capita, and more.

When about half of all new businesses don't last more than five years, finding the right environment for a startup is vital for long-term success, the report says.

Here's how Texas ranked across the three main categories in the study:

  • No. 1 – Business environment
  • No. 11 – Access to resources
  • No. 34 – Business costs

The state boasts the 10th highest entrepreneurship rates nationwide, and it has the 11th-highest share of fast-growing firms. WalletHub also noted that more than half (53 percent) of all Texas businesses are located in "strong clusters," which suggests they are more likely to be successful long-term.

"Clusters are interconnected businesses that specialize in the same field, and 'strong clusters' are ones that are in the top 25 percent of all regions for their particular specialization," the report said. "If businesses fit into one of these clusters, they will have an easier time getting the materials they need, and can tap into an existing customer base. To some degree, it might mean more competition, though."

Texas business owners should also keep their eye on Houston, which was recently ranked the 7th best U.S. city for starting a new business, and it was dubbed one of the top-10 tech hubs in North America. Workers in Texas are the "third-most engaged" in the country, the study added, a promising attribute for employers searching for the right place to begin their next business venture.

"Business owners in Texas benefit from favorable conditions, as the state has the third-highest growth in working-age population and the third-highest employment growth in the country, too," the report said.

The top 10 best states for starting a business in 2026 are:

  • No. 1 – Florida
  • No. 2 – Utah
  • No. 3 – Texas
  • No. 4 – Oklahoma
  • No. 5 – Idaho
  • No. 6 – Mississippi
  • No. 7 – Georgia
  • No. 8 – Indiana
  • No. 9 – Nevada
  • No. 10 – California
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This article originally appeared on CultureMap.com.

Houston lab-test startup seeks $1M for nationwide expansion

Testing Access

Health care industry veteran Jim Gebhart knew there had to be a better way for patients to access lab services, especially those with high health insurance deductibles or no insurance at all.

“This challenge became deeply personal when a close family member developed a serious illness, and we struggled to secure prompt appointments,” Gebhart tells InnovationMap. “It’s incredibly frustrating when a loved one cannot receive timely care simply because of provider shortages or the limited capacity of traditional clinics.”

Driven by the desire to knock down lab-test barriers, Gebhart founded Houston-based TheLabCafe.com in 2024. The platform provides access to low-cost medical tests without requiring patients to carry health insurance. TheLabCafe serves patients in six states: Texas, Georgia, Louisiana, Nevada, New Mexico and Oklahoma. Gebhart, the startup’s CEO, says that by the end of March, LabCafe will be offering services in 20 more states and the District of Columbia.

Gebhart has spent more than 30 years in the lab industry. His career includes stints at Austin-based Clinical Pathology Laboratories, Ohio’s Cleveland Clinic Laboratories and Secaucus, New Jersey-based Quest Diagnostics.

“Since nearly 80 percent of disease diagnoses rely on laboratory testing, I decided to leverage my background to create a more accessible, self-directed process for individuals to order blood and urine tests on their own terms — when and where they need them,” says Gebhart.

So far, Gebhart is self-funding the startup. But he plans to seek $700,000 to $1 million in outside investments in late 2026 to support the nationwide expansion and the introduction of more services.

TheLabCafe contracts with labs for an array of tests, such as cholesterol, hepatitis, metabolic, testosterone, thyroid and sexually transmitted infection (STI) tests. A cholesterol test obtained through TheLabCafe might cost $29, compared with a typical cost of perhaps $39 to $59 without insurance.

A health care professional reviews every test, both when the test is ordered and when the results are delivered, often within 24 hours. After receiving test results, a patient can schedule a virtual visit with a health care professional to go over the findings and learn potential treatment options.

Gebhart says TheLabCafe particularly benefits uninsured patients, including those in Texas. Among the states, Texas has the highest rate of uninsured residents. U.S. Census Bureau data shows 21.6 percent of adults and 13.6 percent of children in Texas lacked health insurance in 2024.

“Uninsured patients often pay the highest prices in the health care system,” Gebhart explains. “We address this by offering straightforward pricing and convenient access to testing without requiring insurance.”

“Our rates are intentionally set to remain affordable, helping individuals take a proactive approach to their health,” he adds. “Regular testing enables people to identify potential health issues early and track their progress as they make lifestyle changes. Ultimately, you can’t measure improvement without data — and laboratory results provide that data.”

Houston geothermal startup secures $97M Series B for next-gen power

fresh funding

Houston-based geothermal energy startup Sage Geosystems has closed its Series B fundraising round and plans to use the money to launch its first commercial next-generation geothermal power generation facility.

Ormat Technologies and Carbon Direct Capital co-led the $97 million round, according to a press release from Sage. Existing investors Exa, Nabors, alfa8, Arch Meredith, Abilene Partners, Cubit Capital and Ignis H2 Energy also participated, as well as new investors SiteGround Capital and The UC Berkeley Foundation’s Climate Solutions Fund.

The new geothermal power generation facility will be located at one of Ormat Technologies' existing power plants. The Nevada-based company has geothermal power projects in the U.S. and numerous other countries around the world. The facility will use Sage’s proprietary pressure geothermal technology, which extracts geothermal heat energy from hot dry rock, an abundant geothermal resource.

“Pressure geothermal is designed to be commercial, scalable and deployable almost anywhere,” Cindy Taff, CEO of Sage Geosystems, said in the news release. “This Series B allows us to prove that at commercial scale, reflecting strong conviction from partners who understand both the urgency of energy demand and the criticality of firm power.”

Sage reports that partnering with the Ormat facility will allow it to market and scale up its pressure geothermal technology at a faster rate.

“This investment builds on the strong foundation we’ve established through our commercial agreement and reinforces Ormat’s commitment to accelerating geothermal development,” Doron Blachar, CEO of Ormat Technologies, added in the release. “Sage’s technical expertise and innovative approach are well aligned with Ormat’s strategy to move faster from concept to commercialization. We’re pleased to take this natural next step in a partnership we believe strongly in.”

In 2024, Sage agreed to deliver up to 150 megawatts of new geothermal baseload power to Meta, the parent company of Facebook. At the time, the companies reported that the project's first phase would aim to be operating in 2027.

The company also raised a $17 million Series A, led by Chesapeake Energy Corp., in 2024.

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This article originally appeared on our sister site, EnergyCapitalHTX.com.

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