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Austin ranks No. 1 on new list of best cities to start a business

Austin ranks No. 1 on new list of best cities to start a business

Fort Work, coworking, Dallas
Austin is the best place to start your own business. Photo courtesy of Fort Work

The entrepreneurial spirit is alive and well in Austin, as we take the No. 1 spot on CNBC's first-ever report on America's Best Places to Start a Business.

To determine the rankings, CNBC pulled data on cities with populations over 500,000 in categories such as business costs, quality of life, and small-company success.

According to the 2016 Kauffman Growth Entrepreneurship Index, Austin startups grew by 81.2 percent in the past year, faster than every city except Washington. On top of that, the study found that "the greater Austin area is breeding the highest rate of new entrepreneurs in the country," says CNBC.

Low tax rates, high educational attainment, and an affordable cost of living (comparatively) contributed to Austin's top ranking. Downsides of starting a business in the Capital City, however, include a lack of venture capital and office space. 

CNBC also spoke with Austin entrepreneurs, including Hops and Grain founder Josh Hare and Honest Dollar co-founder William Hurley, to get a better feel for the city's overall environment.

"It's got the music, the university scene, the hippies, and the rule-breakers," Hurley said. "It's very easy to hire people who want to push the limits. It's an incredibly innovative city."

Austin isn't the only Lone Star city with a business-friendly attitude. Other Texas towns in the top 20 include Houston (No. 6), Dallas (No. 8), San Antonio (No. 10), McAllen (No. 12), and El Paso (No. 16).

Provo, Utah, ranks second, and Washington ranks third.