Tech firms aren’t the only small businesses in Pittsburgh that are rising up the national ranks.
A study by consumer financial analysis firm NerdWallet finds that young entrepreneurs of all sectors in Pittsburgh have more of a fair shot at building a successful venture than those in many of the nation’s other cities.
The San Francisco firm ranks Pittsburgh as the 13th-best region in the nation for entrepreneurs ages 25 to 34. Pittsburgh falls behind 12th-ranked Raleigh, N.C., and is just ahead of Washington, D.C. The Arlington, Va., area was the top-ranked region.
The study examined the nation’s 83 largest cities, scoring them on seven points: commercial and industrial loans under $250,000 per capita from banks with less than $10 billion in total assets; the number of businesses per 100 residents; the percentage of population ages 25 to 34; the percent of population 25 and older with at least a bachelor’s degree; per capita income from 2013; the September 2014 unemployment rate; and the cost of living index from the third quarter of 2013.
Each metric was weighted equally, but many cities were able to rise to the top by offsetting shortcomings in one category with surpluses in another, said NerdWallet analyst Sreejar Jashti, who conducted the study.
Arlington had $193.01 in commercial and industrial loans per capita, below Pittsburgh’s total of $232.80. However, Arlington’s per capita income of $64,298, combined with a high concentration of residents ages 25 to 34 (27.8 percent) and a high population of people 25 and older with at least a bachelor’s degree (74.3 percent) helped it rise to the top with an overall score of 72.76.
Mr. Jashti noted Pittsburgh ranked above the national average in every category except per capita income, which he said is nearly on par with the national average. However, that per capita income of $28,176, combined with only 18.6 percent of the population being 25 to 34 years old and 39.7 percent of the population holding a bachelor’s or higher, brought the region’s overall score to 55.33.
Conventional wisdom says the region’s low cost of living — the city scored a 98.8 on the Council for Community and Economic Research Cost of Living Index — will rise in direct correlation with per capita income, but Mr. Jashti said raising regional incomes without drastically changing the cost of living should be a top priority.
“Broadening the gap between the cost of living and how much people earn I think in the long run will become the most important issue for everyone in the region, particularly young entrepreneurs,” he said.
Networking, which was tied to the percentage of the population 25 and older with at least a bachelor’s degree, and access to mentors, which was tied to the number of businesses per 100 people in a city, were also deemed critical to small business success.
Although Pittsburgh fared well with 2.50 businesses per 100, compared to 2.37 in Arlington, unexamined portions of the region’s entrepreneurial ecosystem could have boosted its rankings even higher.
“I’m coming from the Colorado [area], which has a very robust startup scene, and they’ve got nothing on Pittsburgh,” said John Mason, director of entrepreneurial studies at Duquesne University’s Palumbo Donahue School of Business.
Noting a push within Duquesne to extend entrepreneurial studies to all students as well as a uniquely collaborative environment among the area’s universities, business accelerator programs, nonprofits and established entrepreneurs, Mr. Mason said emerging Pittsburgh businesses have an advantage of accessibility to help that can be hard to come by in other cities.
Robert Stein, director of the University of Pittsburgh’s Institute for Entrepreneurial Excellence, agreed that connectivity was one of the region’s stealth advantages.
With businesses supported by the institute having closed $13 million in deals so far this year and with Mr. Stein predicting the close of two $5 million deals early next year, he said it’s no surprise the city’s collaborative planning has helped it become noticed beyond the tech sector.
“I started this position in April, and what I’ve been able to offer entrepreneurs collectively is better than I’ve ever seen,” Mr. Stein said. “If an entrepreneur needs something and if my group can’t do it, I know four or five more groups that can do it.”
First Published: November 19, 2014, 7:20 a.m.
