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Florida and Texas Overtake Washington for the Top Spots, California Falls out of the Top 10

Idaho, West Virginia and Oregon See Improvement in the DII US Rankings; Maryland, North Carolina, North Dakota and Vermont Fall

The Draper Hero Index (DHI) announces the commencement of quarterly review executive summaries to its United States Draper Innovation Index (DII US), which evaluates each state’s environment for innovation and entrepreneurship.  The DII US now includes Dun & Bradstreet (DNB) data, the leading provider of location-based business data and analytical tools.

“While the real estate mantra is ‘location, location, location,’ the innovation mantra is ‘trust, trust, trust,’ where states with the most freedom and human trust allow for the most innovation, and those with the strictest regulations smother innovation. Regulation kills innovation, while trust allows innovation to flourish. The DII US is the best, most up to date map of the current American economic, regulatory and entrepreneurship landscape and will become even more important as Bitcoin, Blockchain and other emerging technologies continue to transform and drive the economy forward,” said Tim Draper, founder of the Draper Hero Institute.   

The DII US Top 10 States saw significant movement between January and May 2022, especially at the top, with Florida and Texas leapfrogging Washington for the Top 2 spots; they were buoyed by their performance in both the OBHI and SBHI metrics as well as considerable improvements in overall capital investments and in cryptocurrency/blockchain-related sectors and businesses. California fell out of the overall DII US Top Ten and was surpassed by Massachusetts as the nation’s #1 tech innovation environment. The table below highlights the change in ranks for the Top 10 countries in the DII-US from January 2022 to May 2022:

January 2022 Top TenMay 2022 Top TenChange
Washington1Florida1
Florida2Texas2
Texas3Washington3
Wyoming4South Dakota4
South Dakota5Wyoming5
Massachusetts6Massachusetts6
Utah7Utah7
Colorado8Colorado8
Alaska9Virginia9
California10Alaska10

Virginia and Alaska rounded out the Top 10 ranks and pushed California out of the top 10, where it had been in early 2022 due to its overall performance and cryptocurrency/blockchain investments in particular. California’s fall was due to softness in its OBHI and SBHI rankings. Other movements in the Top 10 included South Dakota and Wyoming trading 4th and 5th places while Massachusetts, Utah and Colorado remained steady at 6th, 7th, and 8th. 

Idaho saw by far the most significant jump in the rankings overall, increasing by eight (8) places from January 2022 to May 2022; Indiana, Ohio, Oregon, South Carolina, Virginia, West Virginia, and Wisconsin all rose by two ranks during the same time period. Idaho’s dramatic improvement stemmed from relative strengths in its Overall Business Health Index (OBHI) and Small Business Health Index (SBHI) as well as considerable improvements in both overall capital investments and investments into cryptocurrency/blockchain related sectors.

States declining in the rankings included:

  • Maryland (-4),
  • North Dakota (-4),
  • Vermont (-3),
  • Iowa (-2),
  • Nebraska (-2),
  • Washington (-2).\

Maryland’s decline was largely attributable to comparative weakness in overall capital and cryptocurrency/blockchain investments as well as poor performance on the OBHI and SBHI. North Dakota has yet to register any cryptocurrency/blockchain investments for the year suggesting it will continue to underperform when compared against more innovative states. In Vermont, cryptocurrency/blockchain investments began to slow in the latter half of the quarter, dragging down the state’s overall ranking.

Despite California being home to some of the nation’s most successful tech companies, traditionally the nation’s tech leader – and the destination for more venture capital funding and Bitcoin/blockchain investment than any other state – dropped to 11th in the overall rankings, primarily due to its performance on the Small Business Policy Environment and Tax Environment sub-indices. It has consistently finished at or near the bottom of these indices since the first publication of the DII US.  Additionally, Massachusetts surpassed the state in DII’s Tech Environment scenario.

“High cost of living states, in addition to relatively unfriendly small business and tax policies and regulations, could create significant economic repercussions in the long term,” Dr. Wallace Walrod, DHI’s Chief Economic Advisor. “Non-traditional tech powers such as Wyoming, South Dakota and Utah, on the other hand, are leveraging small business policy and in some cases cryptocurrency policy as powerful ways to attract new entrepreneurs and investors.”

The DII US will continue to be updated each month and can be accessed here.

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