Cincy startup scene sees biggest growth in the nation for 2016

Greater Cincinnati's rankings for startup growth spiked in 2016.

The Queen City was one of five metros that experienced the biggest positive shifts in rank from 2015 to 2016, according to the Kauffman Index of Entrepreneurship, the first and largest index tracking entrepreneurship across city, state and national levels.

In a three-way tie for fifth place, Cincinnati jumped from 35th place to 16th out of 40 metro areas. Some of the other metros that saw big jumps: San Antonio (20th to ninth), Cleveland (26th to 19th), Philadelphia (26th to 21st), Nashville, Tennessee (ninth to fifth), Phoenix (16th to 12th) and Tampa, Florida (30th to 26th).

Most notably, Cincinnati saw a 74 percent rate of startup growth in the 2016 component, measuring howmuchstartups have grown five years after founding based on their number of employees, compared to negative 1.8 percent in 2015.

The top five industries with the highest shares of high-growth companies wereIT, advertising and marketing, business products and services, health and software.

"Anything that gets the story out there that Cincinnati is on the map is good for us," said Tony Alexander, general manager of the Brandery, an Over-the-Rhine startup accelerator.

"We draw most of our companies from out of town, so the more people that have an idea of what Cincinnati can offer, the more quality startups we'll attract."

E.J. Reedy, Kauffman Foundation senior scholar and co-author of the Growth Index said the industry trends in the data suggest that high-tech is not a pre-requisite for high-growth.

“While tech industries continue to have a strong presence among high-growth companies, growth comes from a wide range of sectors, from food and beverage to retail to government services,” Reedy said.

Cincinnati, which promotes the #StartupCincy hashtag, boasts a growing list of accelerators spanning the Tristate, including the Brandery in Over-the-Rhine, UpTech in Downtown Cincinnati and Ocean in Oakley. The entrepreneurial ecosystem includes seed-stage investors, such as CincyTech, Connetic Ventures in Northern Kentucky, and Queen City Angels.

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The area's more than 200 startup companies, and the total amount of venture capital raised is around $140 million over the last 18 months, according to Cincytech.

Cincinnati has gained attention for its potential as a startup hub; in 2013, Entrepreneur Magazine named Cincinnati an "unexpected hub for tech startups." Local startups have increasingly gained national attention for their work, most recently Rodney Williams,founder at Lisnr, raised a $10 million series B round led by Intel Capital.

The money was the largest amount raised by any company to date, receiving funding through Intel Capital’s $125 million Diversity Fund.

The Kauffman Foundation's release of state and metropolitan data follows the May 19 release of national Growth Entrepreneurship results. The May study reported that the Growth Entrepreneurship Index, an indicator of how much entrepreneurial businesses are growing, rose in the last year for the third year in a row.

The newest data allow for an update to annual reports dating back to 2008. Interactive data spanningall 19years is available at http://www.kauffmanindex.org.