Best Places In The World To Start A Company

by Andjelija Vujovic on September 4, 2014

utern-fundingWhen it comes to things like workforce education, low cost of living, and economic health, five countries come out on top for the best places to launch a startup, according to research compiled by Washington State University’s College of Business. So if you are a talented young entrepreneur and are thinking of where in today’s world you should start your business, this article is for you.

The main factors that make a place attractive to startups include:

  • Funding (including investors, loans and government grants)

Startups can work for years before they earn profits, and this is the reason why so many rely on initial funding. Without initial funding from savings, family, friends and business angels, startups cannot develop products and services that will eventually make the company profitable.

  • Educated Workforce

Hi-tech startups rely on an educated workforce that understands how to develop new ideas and follow complex directions.

  • Low Cost of Living

A low cost of living often means that startups pay less for offices, labs, and commercial property. In many cases, it also means that companies can pay employees less without affecting their quality of life.

I write this article in our office in Zagreb, which is one such location where the lower cost of living makes startups last longer on their initial funding and it has made Zagreb a popular destination to start for example software companies for international entrepreneurs, for example Oradian, who develops micro-finance software for the African market.

  • Economic Health

Startups need the stability of a healthy economy. Without a stable economic environment, there are too many uncertainties that can force startups to take fewer risks and slow progress, or ultimately not find their market even if the business idea is good and would work well under better circumstances.

  • Low Corporate Taxes

Low corporate taxes let successful startups devote more money to researching and developing new ideas and business development, instead of paying the government once they reach profitability.

When considering where to startup, one might want to consider one of the following five countries that rank highest on these five factors (with the exception of a couple of countries whose higher corporate tax is offset by other more-than-favorable factors):

HONG KONG

Hong Kong is not only on top of the list because of its extremely low corporate tax rates and low consumer price index, but also because of high literacy and post-secondary education rates, which translates to a workforce than can handle the needs of a burgeoning company. The corporate taxation rate is at 16.5%. There are also some tax incentives for special business operations, such as tax exemption for profits derived by offshore funds and profits derived from operating ships in Hong Kong.

Hong_Kong_skyline_night_lights

When it comes to funding, Hong Kong offers startup funding through Cyberport– a “creative digital community” that plans to provide $25.8 million to startups over the next three years, StartmeupHK– a program aimed at financing technology startups, and InvestHK– a government program that supports business ventures.

As far as educated workforce in Hong Kong is concerned, 51.8% have secondary education and 27.7% post-secondary education, while literacy rate is 93.5%, and unemployment rate 3.2%.

Cost of living in Hong Kong is represented in the image below.

Screen Shot 2014-09-03 at 9.18.46 AM

Note: All Consumer Price Indexes Relative to New York City; NYC=100

As far as economic health factor is concerned, inflation in Hong Kong is 4.3%, while its GDP is $0.26 trillion USD.

CANADA

Screen Shot 2014-09-03 at 11.04.52 AMCanada’s low cost of living and highly educated workforce makes it a great destination for 2014’s startups. Since the country’s inflation rate is nearly flat at 26%, it indicates that Canada’s good economic health should remain consistent for some time, thus making it ideal for a startup.

Canada offers funding through Business Development Canada that provides venture capital, long-terms loans, consulting services, and subordinate financing to small businesses, Community Futures that offers business development loans as well as tech support and training to small businesses, and the Funding Portal which makes it easier for startups to understand and apply for government grants and other funding options.

As far as educated workforce is concerned, 88% have secondary education and 24.2% post-secondary education, while Canada’s literacy rate is 99%, and unemployment 7%.

Cost of living in Canada is represented in the image below.

Screen Shot 2014-09-03 at 9.19.24 AM

Note: All Consumer Price Indexes Relative to New York City; NYC=100

As far as economic health factor is concerned, inflation in Canada is 1.2%, while its GDP is $1.82 trillion USD.

UNITED STATES

greenlowermanhattan (1)Although the United States has a high corporate tax rate at 40%, compared to many other countries, startups often tolerate the tax burden because of its market opportunities to find customers, and also relatively low cost of living, educated workforce, and miniscule inflation.

As far as funding is concerned, US offers funding through Startup America– the US Small Business Administration program focused on helping startups secure funding and growth opportunities, Grants.gov– single source that helps entrepreneurs discover funding from government agencies, and Gust– connects investors with entrepreneurs, and has distributed over $1.8 billion to startups.

US educated workforce consists of 87.65% that have secondary education, 30.94% Bachelor’s degree and 57.28% some college, while literacy rate is 99%, and unemployment rate 6.6%.

Cost of living in the US is represented in the image below.

Screen Shot 2014-09-03 at 9.19.45 AM

Note: All Consumer Price Indexes Relative to New York City; NYC=100

As far as economic health factor is concerned, inflation in US is 1.5%, while its GDP is $16.24 trillion USD.

US corporate tax rate is the highest among these five countries and amounts to 40%.

SINGAPORE

8163893714_f6273e6a5a_zWith a low corporate tax rate at 17% and small inflation, Singapore makes a great location for companies that need to focus money on research and development.

Singapore offers funding through SPRING– a government program that helps stratups find funding while helping them make smart decisions that promote business growth, National Research Foundation– government program that has an Early Stage Venture Fund dedicated to early-stage tech startups, and i.Jam Micro Funding Scheme which connects startups with incubators who invest up to 25% of the new business’s project costs.

As far as educated workforce in Singapore is concerned 68.8% have secondary education, while literacy rate is 95.9% and unemployment rate 1.8%.

Cost of living in Singapore is represented in the image below.

Screen Shot 2014-09-03 at 9.20.03 AM

Note: All Consumer Price Indexes Relative to New York City; NYC=100

As far as economic health factor is concerned, inflation in Singapore is 1.5%, while its GDP $0.27 trillion USD.

Singapore’s corporate tax rate is the second lowest among these five countries and amounts to 17%.

AUSTRALIA

92f7e3ea678b89e13fc74ece6f8d13dfCompared to Singapore, Australia boasts much lower rental costs, a more literate workforce, and plenty of space for companies to develop their products.

Australia offers funding through Australian government that provides grants for qualified startups, Telstra that plans to invest $800,000 in startups during 2014, and ANZ Innovyz START– a program that helps fund and develop about 10 new businesses each year.

As far as educated workforce in Australia is concerned 25% Bachelor’s degree, while literacy rate is 99% and unemployment rate 6%.

Cost of living in Australia is represented in the image below.

Screen Shot 2014-09-03 at 9.20.20 AM

Note: All Consumer Price Indexes Relative to New York City; NYC=100

As far as economic health factor is concerned, inflation in Australia is 2.7%, while its GDP $1.53 trillion USD.

Australia’s corporate tax rate is the second highest among these five countries and amounts to 30%.

About Andjelija Vujovic :

Andjelija Vujovic has over 20 years of working experience in public relations, media, communications, marketing, event hosting, journalism and television. Working worldwide as a professional model, Andjelija has an international background and has developed excellent interpersonal and communication skills.

She has a degree in Management from LSE - London School of Economics and Political Science and obtained an MBA at the International University of Monaco in 2013. During her MBA in Luxury Brand Management studies, she was involved in projects for Societe des Bains de Mer and Fairmont Hotel in Monaco, as a strategic consultant for innovation. She is currently working with Bearing on regional development and corporate innovation projects.

{ 2 comments… read them below or add one }

sateesh c kanagotagi September 5, 2014 at 15:22

I think China, Brazil, India have better offers.

Archt. Flynn B. Arana, uap, rmp, fsp September 7, 2014 at 07:50

Very interesting source of information. So people in this kind of business can able to think on where to settle for a good startup that government agency’s extends financial help to new entrepreneurs. Hope i could find ways on how to be in this countries with financial startup help.

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