Deciding where to locate a health startup company often comes down to one question: where are you? Yes, there’s no place like home, but is this the best way to geographically locate your fledgling enterprise? With the odds of founding a successful health startup already stacked against you, why not pick a place where your chances are a little better than they might otherwise be?

As described in our January 2015 and March 2015 posts, the Health Innovators are conducting a quick, unscientific, but structured comparison of 5 cities: Seattle, San Francisco, Chicago, New York City, and Boston along several variables:

  1. Cost of doing business / regulatory complexity
  2. Talent availability
  3. Financial capital
  4. Health institutions one might work with
  5. Regional culture / quality of life

Please participate in this study by taking our Health Innovation Location Attractiveness survey.

Today’s post focuses on the cost of doing business in each of these comparison cities. Future articles will explore the other 4 criteria.

After reviewing state and local government websites for the costs of setting up new companies, we found minor differences in the fee schedules for business licenses and formation of business entities. We found that the complexity of the corporate registration process and business licensing did vary significantly, with Seattle as the easiest, and New York City and San Francisco as the most baffling. California’s $800/year tax on LLC’s is certainly a disincentive, and New York’s antiquated requirement to publish professional LLC formation announcements in 2 newspapers can cost upwards to $2,000.

Office space is another area where we found some differences in our benchmark cities. Using the monthly rate for a private office in a co-working space as a proxy for office space generally we found that an office in Seattle was $100 to $200/month less costly than the comparison cities. A private office at We-Work in Seattle is $500/month, and is $700/month in New York City and San Francisco.

cowork cost

That, of course, raises a more personal question- how much income does one need to live in these cities? As a proxy for cost of living we used the CNN Money Cost of Living Calculator.

cost of living

For the ease of comparison, let’s assume we pay a software engineer $100,000 in Seattle. For an equivalent lifestyle in Chicago, that would only require $92,000. In Boston, $108,000, San Francisco it takes $131,000, and in New York City it would require $175,000 for the same lifestyle that $100,000 affords in Seattle.

Finally, we looked at the KPMG 2014 Competitive Alternatives Study index for comparing the overall cost of doing business. All 5 of our benchmark cities are in the top 10 most expensive cities in which to do business.


According to this analysis, Seattle (101.4) is right in the middle, roughly tied with Boston (101.1), and significantly more than Chicago (99.1). Not surprisingly, New York City (103.6) and San Francisco (104.2) are nearly tied for the most expensive places to do business not only of these 5 comparison cities, but of all 31 US cities over 2 million in population. For comparison, the least expensive city for doing business in this KPMG report was Atlanta (94.7). Perhaps in future comparisons we could include Atlanta, Washington/Baltimore, and San Diego as contenders.

So who wins? It’s not just about the cost of doing business or the hassles of setting up a company. The other factors- human talent, financial resources, startup culture/quality of life, and health institutions with whom startups can collaborate and pilot their innovations will all be reviewed in upcoming posts. Stay tuned! Let us know what you think in the Health Innovation Startup Location Survey!



Ed Butler

CEO, Videris Health LLC

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