20 Most Innovative States in the US

Published on October 17, 2023 at 6:34 pm by Zarah Hamid in Business, Lists, News

In this article, we will be navigating through the factors driving innovation across the United States, while covering the 20 most innovative states in the US. If you wish to skip our detailed analysis, you can move directly to the 5 Most Innovative States in the US.

Innovation: The Future of America

One of the key drivers of the US economy is innovation. The United States is one of the most innovative countries in the world as it continues to pour hefty investments in research and development. On February 28, McKinsey reported that the United States has dedicated a federal funding of $2 trillion to foster innovation over the next 10 years.

The United States is home to various innovation hubs which offer state-of-the-art research and development facilities, quality education institutions, and incubators. Apart from the established innovation hubs in Boston and Silicon Valley, new innovation setups are appearing across other areas including Indiana and Tulsa. These centers of innovation are of profound importance since they account for 80% of the engineers and patents in the country, while contributing 60% to the country’s overall exports.

The growth in the most innovative regions is also fueled by educated talent. These areas have the ability to attract the potential workforce. Academic centers play an important role in building the right kind of talent for an innovative future. Since innovation hubs attract many companies, abundant employment opportunities emerge for those who have adequate skills. Another important factor that contributes to innovation is how easily startups can avail pre-seed and seed funding since they might not have enough capital to invest in the beginning. These startups can utilize the capabilities of high level R&D throughout their journey, from early idea proposition to final product commercialization. You can also take a look at some of the US states with the lowest business taxes.

Companies Leading Innovation Globally

Renowned companies that have the most innovative products to offer in the US include Tesla, Inc. (NASDAQ:TSLA), Apple Inc. (NASDAQ:AAPL) and Pfizer Inc. (NYSE:PFE). You can also view the country’s top states for business in 2023.

On September 14, Reuters reported that Tesla, Inc. (NASDAQ:TSLA) has been working on a disruptive innovation that could alter the way it makes electric vehicles, by casting the EV underbody in one piece. This approach is based on creating large sub-assemblies of a car and then binding them together. Chief Executive Officer Elon Musk has plans to launch cheaper electric vehicles while locking in high profits in the future. It has also been speculated that the unique manufacturing technique would enable the company to manufacture a car completely within 18 to 24 months, as compared to an average manufacturing time of 3 to 4 years taken by the company’s competitors.

Apple Inc. (NASDAQ:AAPL) utilizes cutting edge technology to come up with world-class innovative products. On October 17, the company reported the upcoming launch of its new Apple Pencil in early November. The Apple Pencil will be compatible with iPads having a USB-C port. Greater drawing precision will be facilitated by the product. Back in June, one of the innovative ideas from Apple Inc. (NASDAQ:AAPL) materialized in the form of its new Vision Pro headset, the company’s first ever mixed reality headset and the first spatial operating system worldwide. The company also introduced its new MacBook Air as the best and the thinnest 15-inch laptop in the world.

Pfizer Inc. (NYSE:PFE) is a pharmaceutical and biotechnology company which transforms the landscape of health and well-being in America and across the globe. The company was one of the first in the industry to launch a vaccine for the global pandemic, Coronavirus. The recent developments from Pfizer Inc. (NYSE:PFE) have been quite novel. The company has been working on an mRNA-based vaccine for Lyme disease which will be a new kind of HIV vaccine. The vaccine under development is a major breakthrough considering that Lyme disease affects approximately half a million Americans every year. On September 7, Reuters reported that the company posted positive results for the phase 2 trial of the vaccine. Overall, the vaccine shots have been safe among children and adults. The phase 3 of the clinical trials are being carried out by Pfizer Inc. (NYSE:PFE) and the partnering firm, Valneva. The companies aim to seek authorization for the vaccine by 2026.

Now that we have taken a look at some of the most innovative companies in the US, let’s take a look at the 20 most innovative states in the US.

20 Most Innovative States in the US

Our Methodology

In order to compile a list of the 20 most innovative states in the US, we sourced data from the Consumer Technology Association’s interactive map. From this map, we shortlisted the states which tend to be more innovative. Based on the aforementioned characteristics of innovation hubs, we selected appropriate metrics to represent an innovative state. Our primary metric was the per capita investment in research and development in every state, acquired from the National Science Foundation. Our secondary metric was the per capita venture capital investment in every state, cited from the Consumer Technology Association’s map and originally sourced from PitchBook. Our tertiary metric was the proportion of tech workforce expressed as the number of tech jobs per 1,000 people in a state. This metric was sourced from the US Bureau of Labor Statistics‘s occupational employment statistics survey.

Finally, we ranked the top 20 most innovative states in the US on a priority basis, as mentioned above.

20 Most Innovative States in the US

20. Virginia

Per Capita R&D Investment: $837.16

Per Capita Venture Capital Investment: $356.94

Tech Related Jobs: 56

Virginia ranks as one of the 20 most innovative states in the US. The state has a high share of tech companies. The STEM professionals in the form of science and engineering graduates are also in high concentration.

19. Texas

Per Capita R&D Investment: $883.37

Per Capita Venture Capital Investment: $360.32

Tech Related Jobs: 40

Texas is an innovative state in the US since the state attracts high venture capital funding. The quality education system and research universities in Texas contribute to a skilled workforce which in turn attracts capital and jobs to the state.

Tesla, Inc. (NASDAQ:TSLA), Apple Inc. (NASDAQ:AAPL) and Pfizer Inc. (NYSE:PFE) continue to drive innovation through their unique product offerings across the US.

18. Kansas

Per Capita R&D Investment: $944.26

Per Capita Venture Capital Investment: $76.56

Tech Related Jobs: 42

Kansas is known for its vibrant entrepreneurial environment. The state hosts and promotes a large proportion of startups. It also offers convenient access to capital which fosters the growth of innovative businesses. Thus, Kansas is an innovative state in the US.

17. Maryland

Per Capita R&D Investment: $960.73

Per Capita Venture Capital Investment: $349.22

Tech Related Jobs: 52

Maryland qualifies as one of the most innovative states in the US as the state is a hub for technological innovation. It offers an attractive business environment due to its proximity to Washington D.C. and its established infrastructure. The life sciences and cyber security industry is flourishing in the state.

16. Arizona

Per Capita R&D Investment: $977.14

Per Capita Venture Capital Investment: $279.96

Tech Related Jobs: 40

Arizona is a leading center of innovation in the US. The state is business friendly and invests a significant amount in research and development per capita.

15. Utah

Per Capita R&D Investment: $984.13

Per Capita Venture Capital Investment: $1,264.80

Tech Related Jobs: 49

Utah offers a favorable environment where entrepreneurial activities can be sustained. The University of Utah is a renowned research university that contributes to building talent and attracting funding in the state.

14. Missouri

Per Capita R&D Investment: $1,054.12

Per Capita Venture Capital Investment: $214.23

Tech Related Jobs: 39

Missouri allows reasonable investments for tech startups to grow in the state. The mentoring, research and financing opportunities are diverse in the state which makes it another innovation-focused state in the US.

13. Iowa

Per Capita R&D Investment: $1,082.03

Per Capita Venture Capital Investment: $77.86

Tech Related Jobs: 41

Iowa is home to many accelerator programs for startups that offer them seed funding, mentoring and networking opportunities. The state also has a high percentage of tech workforce and provides a business friendly environment.

12. Pennsylvania

Per Capita R&D Investment: $1,191.22

Per Capita Venture Capital Investment: $417.46

Tech Related Jobs: 41

Pennsylvania has world-class educational institutes and skilled labor to offer. The state provides leading R&D facilities and empowers a significant number of startups and small businesses. Hence, Pennsylvania ranks as one of the most innovative states in the US.

11. Indiana

Per Capita R&D Investment: $1,220.25

Per Capita Venture Capital Investment: $78.53

Tech Related Jobs: 35

A culture of collaboration and a strong education system promotes innovation in Indiana. The state has been capable of attracting many companies that engage with technologies including artificial intelligence, microelectronics, and hypersonics.

10. Colorado

Per Capita R&D Investment: $1,229.34

Per Capita Venture Capital Investment: $1,229.34

Tech Related Jobs: 54

The most innovative states in the US include Colorado as well. The state has a high concentration of tech workers in addition to an educated workforce. Businesses and startup growth are supported by the environment in Colorado.

Some of the most innovative companies in the world include Tesla, Inc. (NASDAQ:TSLA), Apple Inc. (NASDAQ:AAPL) and Pfizer Inc. (NYSE:PFE).

9. North Carolina

Per Capita R&D Investment: $1,267.06

Per Capita Venture Capital Investment: $374.9

Tech Related Jobs: 40

North Carolina is one of the US states with high research and development funding. It is home to many high rated universities which build talent for the state. There are many businesses related to high science, engineering and technology that operate in the state.

8. Minnesota

Per Capita R&D Investment: $1,370.85

Per Capita Venture Capital Investment: $488.33

Tech Related Jobs: 52

Minnesota holds a high number of patents in various fields of tech. Some of the most innovative companies in Minnesota belong to biotechnology, fintech, software, and internet of things. There are numerous academic and research institutions in the state.

7. New Hampshire

Per Capita R&D Investment: $1,983.45

Per Capita Venture Capital Investment: $117.06

Tech Related Jobs: 50

New Hampshire is a leading innovative state in the US. The state’s tax-friendly policy attracts businesses as well as investments. New Hampshire is also known as a tech hub since this sector supports the state’s overall economy and employs a significant population.

6. Michigan

Per Capita R&D Investment: $2,147.99

Per Capita Venture Capital Investment: $144.38

Tech Related Jobs: 41

Michigan qualifies for the most innovative states in the US as a result of its high per capita R&D and venture capital investments. The growing tech startups and an expanding skilled workforce contribute to innovation in the state.

Click to continue reading and see 5 Most Innovative States in the US.