Denver, Phoenix Top Cities With Lowest Startup Costs

Launching a startup is a grueling process, but maintaining it and cosseting it to profitability is a whole different story -- and is equally, if not, intensely more taxing. The odds are also stacked against business founders who are pursuing a unique vision for their company.

In 2019 alone, there are a bunch of companies that have met their unfortunate demise. A company like Chariot, which is a mass transit startup that was purchased by automaker giant Ford for $3 million in 2017, still closed down shop this year, as recounted by TechCrunch. Vreal, another ambitious company that was able to raise $15 million, was pursuing a platform for connecting VR users to live streamers in a world where VR users can explore and spectate on the action the live streamers are playing. However, as with Chariot, the company terminated its operations in 2019.

While there isn't a single factor that can be ruled out as the main reason why startups fail, there are ways to make conditions more favorable for new companies. Like, for instance, lowering down costs. Embroker lists down the top 10 cities where companies can launch startups at a discount. Their methodology for arriving at their top 10 list is they first narrowed down 50 cities with population sizes above 600,000 and a job growth rate of at least 1% from the top 100 Metropolitan Statistical Areas (MSAs) in the U.S.

Embroker then calculated for each city the overall startup costs, which include median rent, energy costs, median base salaries, state filing fees, and corporate income tax.

Denver came out at the number one spot with costs like yearly median office rent of only $7,543 (the lowest among the top 10 cities), an annual energy expense of $605, and a state filing fee of $50. However, Denver is the highest when it comes to salary expenses, as the median salary for the city is $61,325.

Denver has already caught the attention of some journalists, dubbing it "the next Silicon Valley." It is the home of startup BiggerPockets, an online community for members looking to find success in real estate investing, and SonderMind, a platform that matches patients with healthcare providers under the insurance coverage.

Phoenix was slightly close to Denver in yearly energy costs at $761 but somewhat more expensive in annual office rent at $10,705. The median base salary was $53,907 for the city in Arizona.

Tampa has the most expensive median rent among the top 3 at $13,497. Its yearly energy is also higher than Denver and Phoenix at $952, and its median base salary is $52,609.

The other cities that made it to the top ten following Tampa are Salt Lake City, Louiseville, Syracuse, Portland, Dallas, Tucson, and one from California, Riverside.

Here's the full list.