The Best States for New Businesses in the AI Space

 

The growth of AI businesses is becoming explosive. While the technology itself is still being worked on, and we’re still finding ways to apply it to new businesses and practices, projections for AI revenue suggest well over $100 billion in the industry by 2025. And if anything that may be underselling AI’s potential.

That kind of growth will naturally mean the emergence of countless new businesses using the technology in all kinds of different ways. But for those interested in analyzing this expanding market — or perhaps even getting started in it personally — one interesting question is where specifically the bulk of this growth will occur.

Here, we’ll identify and examine some of the parts of the country that appear particularly well positioned to embrace new AI businesses.

Texas
Texas has a lot going for it with regard to expansion in the 5G industry. The main reason we say this is actually because the state is already poised to be among the American leaders in 5G. We’ve written before concerning 5G’s impact on AI in automation in industries, and it’s increasingly clear that where there is 5G, there is significantly greater potential for AI practices across a range of industries. Eventually, this will be a good thing for the entire country, as 5G home, mobile, and business coverage continues to expand. If we look at cities currently hosting 5G networks though it’s clear that Verizon, AT&T, and Sprint and T-Mobile — America’s biggest providers — are all focusing on Texas metro areas. The state is getting out in front where 5G is concerned, which makes it an attractive target for new, AI-related businesses.

There are additional factors that make Texas an interesting state to watch as well — most notably with regard to its evolving energy sector and its growing startup appeal. On the energy front, Texas is seeing its long-established oil and gas industry transforming, moving toward more sustainable practices and more use of advanced technology. This evolution will include innovation in AI (for purposes of worker safety, energy management, and more). As for startup appeal, it’s becoming a fairly big story that Texas is attracting a lot of entrepreneurs and venture capitalists. The state’s lack of personal income tax is responsible for some of this attraction, and it’s leading to Texas becoming a new cradle of innovation in general.

New York
Somehow New York is often left out of discussions about states sparking innovation and industry development. Yet particularly in the last few years, conditions in the state have made it one of the most favorable locations for new businesses in AI and in tech more broadly.

Specifically we’re beginning to see a great deal written about New York City becoming a tech town — not quite Silicon Valley, but certainly an emerging force across relevant industries. The city is seeing the fruits of an effort carried out in response to the 2008 financial crisis that sought to “build a talent engine” to attract tech investment. It took a long while, but now the city is positively bursting with new and growing businesses in the technology sector — naturally forming a strong foundation for new AI companies to come.

On top of New York City initiatives aimed at developing and attracting tech talent, the state has also developed a particularly easy climate for new business formation. On the most fundamental level, registering a new LLC with New York has become a hassle-free matter that prospective business owners can engage in completely online (without any aggravating trips to state government offices). This makes it easier for people to turn ideas into official businesses with proper tax status and state standing. Meanwhile, state programs like START-UP NY have been developed to help these new businesses enjoy various tax incentives during their early years of operation. All of this makes the state particularly welcoming, such that those interested in joining the emerging tech (and AI) market will find it easy to do so.

Utah
Utah is not nearly as populous as New York or Texas, and it is not as well known for business growth in general. However, a report on where AI jobs are growing already makes it clear that Utah is one of a handful of states seeing significant expansion. While the same report does point to New York as a space that already leads in AI, and Texas as another state seeing growth, Utah is perhaps the biggest surprise. It sits alongside Colorado, Virginia, Arizona, and Texas in a cluster of states seeing 97% growth in AI.

It’s actually difficult to clearly define what it is that initially led to Utah’s emergence in this space. Not unlike New York, the state does have some favorable conditions for new businesses, including a straightforward state registration process and certain kinds of assistance for new, small companies. These factors, combined with what is generally regarded to be a high quality of living in some of Utah’s main cities, can certainly attract tech entrepreneurs and innovators in AI.

Ultimately though, the development of data-driven tech companies in Utah appears to be having something of a snowball effect. A few leading businesses in what is affectionally dubbed the “Silicon Slopes” area have given the impression that Utah is leading in data, machine learning, and AI. And once that reputation develops, more activity follows.

The scope of AI growth will ultimately supersede specific states, which is a good thing for the industry. We'll see exciting new companies across virtually the entire country within a matter of years. As of late 2020 though, Texas, New York, and Utah are some of the early leaders to keep tabs on.