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Top American cities for business innovation

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Now that the same mall stores, coffee shops and fast-casual restaurants have sprouted on nearly every corner in America, it follows that every American city fosters a fairly similar business climate, right?

Not so, according to “Innovation That Matters,” a study of startup-friendly markets coast-to-coast released earlier this year through a partnership between the U.S. Chamber of Commerce and 1776, a business incubator.

By ranking such factors as population flux and industry specialization, researchers deciphered that some American cities are better suited to foster industrial and high-tech startup businesses than others.

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“In the same way a handful of cities became major commerce centers in the industrial era, new cities will emerge as leaders in the digital economy,” the report says. “Yesterday’s expertise will not guarantee tomorrow’s economic wins.”

The report’s authors concede that “hard problems” face communities nationwide when it comes to innovating industries big and small. They acknowledge these “global, complex problems” — such as attracting fresh, young talent, mobilizing financial resources, or having an ample pool of mentors to help startups succeed.

They deduct that not every American city is positioned to develop startup-friendly solutions to these problems. For instance, “while the San Francisco Bay Area is the clear leader in total startup activity, it’s lack of cohesive community and declining quality of life for residents helps move Boston to the top spot.”

So not every city is primed to foster business innovation. But just about every industry including insurance and financial services will be transformed by new technologies, according to this research.

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The study highlighted four key steps that municipal leaders can take to attract high-tech startups and other innovative businesses to their respective markets:

  • Accept an inevitable dominance of the digital economy.
  • Foster a business culture where the new and the old comfortably commingle and share assets.
  • In addition to new businesses, invite established corporations, higher education institutions, elected leaders and community groups to participate in the innovation discussion.
  • Encourage legislation that supports high-tech infrastructure and invention.

One thing is clear: Digital innovation takes place in cities as opposed to rural areas or small towns. Dense population and bustling commerce help propel the types of professional partnerships that birth innovation.

Keep reading to see which 25 American cities are best situated to become the global industrial leaders of the digital era, along with some of the reasoning behind the rankings:

New Orleans is one of the country's top cities for innovation

“Geographically, the digital economy is not advancing consistently across the country,” write the authors of the 2016 “Innovation That Matters” study. “It is concentrated in … densely populated and highly connected urban centers where people can work together closely to share and discuss ideas.” New Orleans, seen here, just made the cut. (Photo: iStock) 

25. New Orleans

24. Kansas City

23. Phoenix

22. Miami

21. Atlanta

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Salt Lake City is one of the county's most innovative cities.

“Salt Lake City’s startup community is gaining momentum, but it hasn’t broken out yet,” the authors of the 2016 “Innovation That Matters” study write about city No. 17 on their list. “The region’s ability to harness its capital base may be its most distinct advantage.” (Photo: iStock)

20. Houston

19. Dallas

18. Baltimore

17. Salt Lake City

16. Minneapolis

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Seattle is one of the country's most innovative cities.

“Startups in Seattle (seen here) are doing well in a variety of sectors, but no clear specialization has emerged yet,” write the authors of the 2016 “Innovation That Matters” study. What’s more, in city No. 11: “The talent base in Seattle is thriving.” (Photo: iStock)

15. Nashville

14. Pittsburgh

13. Portland (Oregon)

12. Chicago

11. Seattle

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Los Angeles is one of the county's most innovative cities.

“Los Angeles has the startups — and the capital — to compete,” authors of the 2016 “Innovation That Matters” study documented about city Mo. 7 on their list, seen here. “Somewhat surprisingly, L.A. seemed to struggle on every dimension of the talent question.” (Photo: iStock)

10. New York City

9. Washington, D.C.

8. Philadelphia

7. Los Angeles

6. Austin

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Raleigh, North Carolina is one of the country's most innovative cities.

“Raleigh-Durham may not be one of the largest startup communities in the country, but its well-connected ecosystem, density of startup activity, strong cultural coundation and deep talent pool positions it well to thrive in the new digital economy,” write the autors of the 2016 “Innovation That Matters” study. Raleigh, seen here, is also the capital of North Carolina. (Photo: iStock)

5. San Diego

4. Raleigh-Durham

3. Denver 

2. San Francisco Bay Area

1. Boston

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