Nearly 40% of new businesses fail to survive past their third year, making the early years the most challenging for entrepreneurs. Entrepreneurial success is often not just about what it is created, but also where. This is why Yijin Hardware looked at the best U.S. states for Entrepreneurial success in 2025.
By examining how likely new businesses are to last three years, a survival probability was calculated by looking at each individual year. Tax systems were also taken into account and calculated based on the minimum tax due (even if no profit is made), revenue threshold, payhold threshold, and the rent threshold. The analysis also considered the availability of funding through loans, venture capital (VC) closed deals, and the strength of local startup support like accelerators. Using these measures, the study ranks the most successful environments for entrepreneurs in 2025 in the US with a final startup survival score.
Here is a summary:
| State | Startup Survival | Survival Probability | Tax Easiness | Avg SBA Loan Size in $ | Startup Accelerators | VC Deals Closed for Startups |
| California | 65.30 | 70.6% | 24.8 | 901K | 356 | 4,675 |
| Tennessee | 55.20 | 55.6% | 96.3 | 698K | 21 | 146 |
| Washington | 53.00 | 70.8% | 57 | 704K | 33 | 441 |
| Oregon | 51.20 | 52.4% | 96.3 | 554K | 21 | 146 |
| North Carolina | 48.20 | 62.6% | 52 | 780K | 30 | 256 |
| Arkansas | 48.20 | 54.9% | 81.2 | 590K | 8 | 14 |
| New York | 47.40 | 58% | 48.3 | 500K | 155 | 1,992 |
| Maryland | 47.20 | 57.7% | 76.6 | 470K | 29 | 158 |
| Michigan | 46.90 | 58.4% | 76.6 | 434K | 26 | 195 |
| Wisconsin | 46.70 | 58.5% | 65.4 | 635K | 14 | 86 |
California is the most successful entrepreneurial state in 2025, with over 70% of startups making it past the three-year mark. It has more Venture Capital (VC) deals and startup accelerators than any other state, more than double. Average loan sizes are also the highest at $900K, giving founders a solid financial base to get started.
Tennessee follows in second, continuing to be a top choice for founders. The state’s business taxes are the most lenient, with a tax ease score of nearly 100. Tennessee’s business-friendly policies, combined with a high startup survival rate, make it an increasingly better place for entrepreneurs to succeed in.
Washington comes third with an overall lean startup survival score of 53. The state has become a magnet for entrepreneurs thanks to its high survival probability. Its 3-year survival rate sits at 70.8%, giving startups a better chance of lasting than in California. Its high loan size and 441 VC deals also point to its solid position as one of the best entrepreneurial states.
Oregon ranks fourth among the best U.S. states for entrepreneurial success in 2025. The state’s commitment to fostering entrepreneurs makes it a standout choice, as Oregon ties with Tennessee for the easiest tax score at 96.3. Oregon combines low costs with high rewards, as 52% of all startups stay afloat after three years, a strong sign of lasting success.
North Carolina rounds out the top five, coming in with a final score of 48.2. It offers one of the largest SBA loan averages at $780K. With 30 accelerator programs and 256 closed VC deals, the state gives startups essential tools to thrive. A 3-year survival rate of 62.6% highlights the state’s steady startup base.
Arkansas ties with North Carolina, both getting a startup survival score of 48.2. Entrepreneurs here benefit from strong financial access, with SBA loans averaging nearly $600K. A favorable tax score of 81.2 also reflects Arkansas’s business-friendly approach, and more than half of startups make it through the early years.
New York follows in seventh as the most successful state for entrepreneurs in 2025, with a total score of 47.40. New York has a similar profile to California, with the two Metropolitan states having the highest VC deals and startup accelerators in the list. It explains their long-term success, as 58% of startups in New York make it through the initial years.
Maryland comes in close in eighth place with a final score of 47.2. About 58% of startups are still standing after three years, and founders here are getting meaningful support, with SBA loans averaging $470K. Between the 29 accelerators and growing investor interest, Maryland is one of the best states for entrepreneurs.
Michigan follows in ninth as one of the top U.S. states for entrepreneurial success. It earns a tax ease score of 76.6 and provides early-stage companies with average SBA loans of $434K, helping to fund operations and growth from the beginning.
Wisconsin rounds up the top ten, with more than half of its startups still going strong after three years. The state’s average SBA loan size stands at $635K, giving new businesses strong funding support, similar to what is available in Tennessee. Its 14 accelerators and regular VC activity point to a growing, well-supported startup environment.
Gavin Yi, the CEO of Yijin Hardware, commented, “The first few years are make-or-break for any startup. Survival depends heavily on choosing a supportive environment, one with manageable taxes, accessible funding, and strong local networks. These factors create the foundation that entrepreneurs need to navigate challenges and build lasting businesses.”