California: Number One No Longer

Steve Breen/San Diego Union-Tribune

All the signs were there, now it's confirmed: California is not the best place to start a business. [bold added]

Washington, Texas and Florida are the best states to launch a technology startup, beating California’s Silicon Valley, according to a new index that ranks the vitality of national and global innovation hubs...

The Draper Innovation Index grades U.S. states and countries world-wide based on a range of local factors that its developers say support a healthy startup ecosystem. They include regulatory, economic, investment and workforce trends, along with less common indicators, such as openness to cryptocurrencies. Sources of data include the World Bank, the United Nations, the Nasdaq Stock Market and dozens of other private- and public-sector organizations.

The grades are then distilled into three broad categories, each with a separate rank. They include trust and transparency in local governments, the potential for development opportunities, and an overall rank based on the balance of all factors combined.

China, for instance, ranks second for emerging opportunities, but drops to 51 for government quality, according to the index. Its overall rank is 13. The U.S. tops the rankings in all three categories...

Although California scores high for its thriving tech sector, the state’s overall grade is weighed down by red tape, high taxes and other state regulations, [venture capitalist Tim] Draper said.

For decades Silicon Valley companies have expanded in other States for the reasons cited above--lower taxes, regulations, and labor costs--but the dam started to break when venerable California enterprises like Hewlett-Packard and Oracle undertook the costly process of moving their headquarters.

There is no credible challenge to the progressive politics that have caused talent and wealth to flee, so look for California's downward slide to continue.