It is a good time to raise money in Massachusetts. Start-ups in the Bay State attracted some $5.8 billion in venture capital last year, according to the National Venture Capital Association and research firm PitchBook. That is the best fundraising year in the state since 2007, and it helps Massachusetts to a three-way tie with Pennsylvania and Connecticut for most improved state in the Top States for Business 2017 ranking. Each state rises 10 spots this year, yet it is Massachusetts‘ foray into the top 10, from No. 20 last year, that is most impressive: It is the state’s first top 10 finish since 2011.
Massachusetts has always dominated our Education and Technology & Innovation categories, and this year is no exception — the state takes first place in both. But the big change this year is in Access to Capital, where the state moves to No. 7 from No. 19 last year. We measure a variety of financing methods, but where Massachusetts really shines is in venture capital, where it trails only California and New York.
The improvement is no accident. First-term Gov. Charlie Baker, a former health-care executive, has been focused on improving the state’s business climate. He has made progress based on our rankings, but the state still must improve its No. 41 Infrastructure ranking and reel in its high costs in order to join the truly elite.
Pennsylvania notches the best all-around improvement, rising in 5 of our 10 categories of competitiveness. Even so, the Keystone State just barely makes it into the top half, at No. 23.
Pennsylvania’s biggest improvement is in Education, where it moves up 11 spots to No. 10, thanks to rising high school test scores and modest progress in modernizing school classrooms. But a sharp divide between rich and poor school districts still plagues the state.
The state improves eight spots to No. 21 in Workforce as more working-age people are moving into the state, and eight spots to No. 34 in Economy as the housing market begins to recover. But Pennsylvania still struggles with high costs, and its infrastructure is in the bottom tier.
Also jumping 10 spots overall this year is Connecticut, but the move seems a bit less impressive when you consider that the state only moves to No. 33 from last year’s No. 43. The move is thanks in large part to a 15-place jump in Education, to No. 3 from No. 18. Even that can be deceiving, however. The improvement in the category is primarily due to improved high school test scores. The state maintains strong support for its K–12 schools, but a change in the school funding formula is on the table as the Constitution State confronts some serious budget issues.
Despite the overall improvement, Connecticut continues to rank near the worst in Infrastructure and Cost of Living and is facing an exodus of high-profile corporations from the state.
Other big gainers:
- No. 9 Tennessee and No. 22 Missouri each jump nine spots on improving economies.
- An improving Workforce ranking helps New Hampshire rise eight places to No. 18.
- Economy powers No. 7 Virginia‘s six-place move.
- Three states exhibit five-place moves: No. 16 Ohio, No. 25 Maryland and No. 45 Rhode Island. While still moored near the bottom, Rhode Island’s finish is the best it has ever done in our 11 years’ ranking the states.
The biggest decline in this year’s rankings belongs to No. 27 Wyoming, which plummets 14 spots. As the nation’s largest coal producer and an important oil state in its own right, the Cowboy State is especially vulnerable to swings in energy prices. The price of Powder River Basin coal fell sharply during much of last year. While it has rebounded a bit this year, it is still down more than 11 percent from its recent highs in 2014. Partly as a result, Wyoming’s Economy rank plunges to No. 43 from No. 14 last year.
Also falling in the Economy category is New York, which finishes No. 38 overall — a drop of 11 spots in the ranking — on slowing growth. Another concern for the Empire State is the budget, with state Comptroller Thomas DiNapoli already warning of a revenue shortfall in the fiscal year that just began.
Illinois does not even have a budget — and hasn’t had one for three years. The Land of Lincoln’s fiscal dysfunction has begun to clearly outweigh its inherent business advantages, dropping the state seven spots, to No. 31, overall.
Another state dropping seven spots is last year’s Top State for Business, Utah. A surge in state support for education helped the Beehive State take top honors last year, but it may have been a one-time thing. This marks only the third time in 11 years that Utah has failed to make the top five.
And North Dakota, whose oil-drenched economy was the envy of the nation not long ago, drops another seven spots, to No. 19, overall this year. With the apparent end to the domestic oil boom, the Peace Garden State’s economy contracted by 6.5 percent last year, the worst performance in the nation.
More from Top States for Business:
America’s Top States for Business 2017: Complete coverage
The 10 best states for jobs in America
The 10 best American states for education
Source: cnbc economy
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