A new national scorecard just slid Chicago into the top 10 U.S. startup markets, but the applause comes with a pretty big asterisk. Reviewers say the Windy City is strong at keeping early-stage companies alive, while lagging behind peers at producing lots of brand new employer businesses.
As reported by the Chicago Business Journal, the city landed ninth in a new list published Dec. 23, 2025, with the ranking explicitly crediting above-average startup survival rates. The story also notes Chicago’s weaker showing on measures that capture new business formation and attraction compared with several peer metros.
Why Chicago Scored Well
Analysts point to a deep corporate customer base, a large talent pipeline from area universities, and an investor community that helps promising startups clear the riskiest early years. The U.S. Small Business Administration has noted that, nationally, about seven in 10 new employer firms survive at least two years and roughly half make it to year five, a baseline that helps explain why survival metrics matter in city rankings. Local boosters also highlight Chicago’s steady success at landing headquarters and corporate relocations, which can provide pilot customers and exit opportunities for startups, according to World Business Chicago.
Where the Ranking Says Chicago Falls Short
Despite those strengths, the ranking flags slow rates of new company births as Chicago’s weak link. CNBC's Top States for Business analysis found Illinois ranked 13th overall but scored poorly on "economic performance" metrics that include new business formation, a concern echoed by metro-level application data tracked by the U.S. Census Bureau Business Formation Statistics. Put simply, Chicago appears to keep startups alive, but it does not always turn would-be entrepreneurs into employer businesses at the same rate as some competitors.
What Policymakers and Analysts Are Watching
Local economic development groups and analysts say survivability is an advantage, but many officials want to see more first-time founders and higher conversion of business applications into payroll jobs. Researchers at the Federal Reserve Bank of Chicago point to the recent surge in business applications nationwide and caution that applications alone do not guarantee new employer businesses without targeted local support for hiring, financing, and scaling.
Bottom line, Chicago looks like a safer home for founders who manage to get started, but climbing higher in future startup rankings will require converting momentum into more new employer businesses. The ranking is a reminder that a healthy entrepreneurial ecosystem is measured as much by births as by the ability to keep companies growing.
