Boston tops Silicon Valley as innovation hub, study says

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BOSTON – The Hub edged out Silicon Valley as America’s top location for digital innovation in a ranking of major U.S. metropolitan regions released Thursday, with researchers citing Boston’s higher scores for livability and connectedness.

“While the San Francisco Bay Area is the clear leader in total startup activity, its lack of a cohesive community and declining quality of life for residents helped move Boston to the top spot,” the study from the U.S. Chamber of Commerce Foundation says. In particular, it cited the sky-high cost of living in the San Francisco Bay Area, but it also notes that entrepreneurs in the metro region indicate that “it is becoming too cutthroat to inspire success.”

The Bay Area has more startups and the venture capital that gives them life than any other U.S. metro region, but the study said entrepreneurs in Boston cite stronger connections with educational and other institutions locally as well as with everyday citizens. Those factors helped vault the Hub, which also has almost as much entrepreneurial capital, to No. 1. Others rounding out the top five cities were Denver, San Diego and Raleigh-Durham, North Carolina.

“Our findings underscore the importance of collaboration among the startup community with corporations, universities, foundations, and local government,” Tom Collamore, senior vice president of communications and strategy at the U.S. Chamber of Commerce, said in a statement about the study.

The results highlight Boston’s success in reshaping itself and attracting America’s largest industrial company, General Electric, to move to the city’s “innovation district” as it focuses on “the Internet of things” and medical devices along with more traditional machinery. The city has also been rapidly infusing digital technology into its operations.

The report ranked 25 major metro areas in terms of their “readiness to capitalize on the inevitable shift to a digital economy.” Factors included talent, capital, industry specialization, density, connectivity between the city and the startup community, and the attractiveness of the city’s culture. The data from each were used to calculate an “Innovation that Matters” index.

The research produced some surprises, such as Denver and Raleigh-Durham. “They have fewer startups than larger cities like New York and Los Angeles but stronger ties between the startups and institutions in the community,” the study says. “San Diego performed well thanks to its strong talent and capital base, dense community and growing specializations in health and IT,” or information technology.

The report focuses on “cities and what they can do to thrive in this new era,” the study says. “A new generation of entrepreneurs and the institutions that guide them have the power to position urban centers to either rise or fall as they aim to keep pace with changing times.”

Researchers also sought to gauge cities’ ability to transition to the rising digital economy and skill to capitalize on that upcoming shift, as well as the capacity for each city to “imagine a new future,” and to unite startups with surrounding universities, businesses, nonprofit organizations and governments, among other factors. Boston enjoys unrivaled strengths in terms of educational institutions but also has world-class hospitals and a leading biotechnology research sector.

That health focus can be a key to the Hub’s future success, as the study notes that health-related industries produced “the most startup activity” compared with education, energy and what it called “smart city” sectors. “Health is the industry most ripe for cities to build competency and leadership,” the study says

The study’s top-10 list also includes Los Angeles, Philadelphia, Washington, New York and Austin, Texas.

Contact Kara Bettis at [email protected] or on Twitter @karabettis.