Best Places to Start a Business in Northern California

Written by  Teddy Nykiel , NerdWallet

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The economy of Northern California, home of Silicon Valley, is steeped in innovation and entrepreneurship. Technology companies including Hewlett-Packard, Apple and Intel had their humble beginnings in this region. The San Jose and San Francisco metropolitan areas ranked third and sixth, respectively, on the 2015 Kauffman index of startup activity, which measures the rate at which new entrepreneurs and new businesses are popping up.

 To pinpoint exactly where entrepreneurs thrive in this part of the state, NerdWallet analyzed 177 places with populations of 10,000 or more.

Key takeaways

Large and small businesses perform well. Northern California is home to Fortune 500 companies including Oracle, Google and Facebook, but small companies have a place here, too. The state has a network of Small Business Development Centers located throughout Northern California that offer free one-on-one counseling for small-business owners.

The Bay Area is key. Northern California’s economic epicenter is the San Francisco Bay Area. Eight of the top 10 cities on our list are in Alameda, Contra Costa, Marin, San Mateo and Santa Clara counties.

Tourism matters, too. Technology drives Northern California’s economy, but tourism is important, especially for Monterey. All of the cities on our list are within a few hours’ drive of major destinations including California’s dramatic northern coastline, Yosemite National Park and San Francisco.

NerdWallet’s rankings

We analyzed 177 places in Northern California with populations of at least 10,000 and considered six metrics in two categories — business environment and the local economy — to assess each location. For more details, see the methodology section at the end of this article.

Best places to start a business in Northern California

1. Emeryville

Across the bay from San Francisco and just north of Oakland, Emeryville is a small city with a lot going on. Pixar Animation Studios is the city’s largest employer, but small companies thrive here, too. Technology startups in Emeryville include MadeSolid, which sells 3D printing materials, and TubeMogul, a public company that makes software for video advertising. The East Bay Economic Development Alliance supports local businesses by offering site location assistance and connecting businesses with financing options, incubators and other resources.

2. South San Francisco

South San Francisco is home to Genentech Inc., a leading biotechnology company and the city’s largest employer. In 2010, the company dubbed the citythe “birthplace of biotechnology” on highway signs. There are over 200 biotechnology-related companies in the city, according to the city of South San Francisco and the California Life Sciences Association. The San Mateo County Economic Development Association advocates on behalf of South San Francisco businesses and offers members information about policy initiatives and economic research.

3. Grass Valley

In the foothills of the Sierra Nevada, between Sacramento and Reno, Nevada, Grass Valley is a historic Gold Rush town with a diverse economy supported by tourism and technology. The Grass Valley Downtown Association represents downtown businesses including Tess’ Kitchen Store, Carolines Coffee Roasters and Tofanelli’s Gold Country Bistro. Grass Valley has the largest percentage of businesses with paid employees — 44% — compared with other places in our top 10. It also has the lowest median housing costs of the top 10 communities at $922 a month.

4. Burlingame

Burlingame’s convenient location — just south of San Francisco International Airport and between San Francisco and Palo Alto — makes it a hub for tourists. The Downtown Burlingame Business Improvement District and Broadway Burlingame Improvement District support both chain and independently owned restaurants and shops, including Helen’s Jewels and Jougert Bar. The city is also home to a collection of car dealerships known as Auto Row. The San Mateo Small Business Development Center offers advice to small businesses in free one-on-one sessions.

5. Palo Alto

In the heart of Silicon Valley, Palo Alto is widely recognized as one of the most innovative cities in the country. Hundreds of startups are based here, including Piazza, a question-and-answer platform, and Gobble, a meal delivery service. Stanford University is the city’s top employer, and Stanford Research Park is home to 150 companies focused on electronics, biotechnology, space, computer hardware and software. The Palo Alto Downtown Business and Professional Association supports restaurants and retail businesses in the city’s downtown.

6. Fremont

In San Francisco’s East Bay, Fremont is the largest city among our top 10 and has the highest average revenue per business of all places on our list: $6.8 million. Tesla Motors and Western Digital are two of the city’s largest employers. The city also supports small businesses – so much so that it has a designatedsmall-business ally to assist small-business owners in launching and growing their companies. The East Bay Economic Development Alliance supports businesses in the area by connecting them with local financing and development resources.

7. Monterey

In Monterey, with its stunning coastal views, sunny beaches and world-famous aquarium, the economy is largely driven by tourism. The Old Monterey Business Association supports local businesses in the city’s downtown, including Alvarado Street Brewery and Grill and Om Studios. The city’s largest employers include CTB/McGraw-Hill and Dole Food Co. The California State University Monterey Bay Small Business Development Center advises area small businesses for free.

8. Los Gatos

Just southwest of San Jose, Los Gatos attracts both large companies and entrepreneurs. Netflix is headquartered here and is one of the city’s top employers. Los Gatos has a quaint downtown with shops and restaurants, as well as other retail districts throughout the city. Work2future, the area’s economic development organization, provides resources to help businesses start and grow.

9. Walnut Creek

Walnut Creek is a suburb in San Francisco’s East Bay. Its largest employers include John Muir and Kaiser Permanente medical centers. The Walnut Creek Downtown Business Association supports local restaurants, shops and services in the city’s downtown — including Coffee Shop and Swan’s Fine Books. Small businesses can get free one-on-one counseling at the Contra Costa Small Business Development Center.

10. Mill Valley

North of San Francisco, in Marin County, Mill Valley is an affluent community near Mount Tamalpais. The city has 24 businesses for every 100 people, the highest number of businesses of all the communities on our list. Residents earn the highest median income in our top 10 — $111,563 a year — and the city has the lowest unemployment rate of at 3.5%. The Renaissance Entrepreneurship Center in Marin offers business development classes, incubation programs and co-working space for small businesses.

Best places to start a business in Northern California data

Scroll through the table below to see the data on 177 places.

RankCityPopulationNumber of businessesAverage revenue per businessBusinesses with paid employeesBusinesses per 100 peopleUnemployment rateScore
1 Emeryville 10,206 1,817 $2,665,028 35.06% 17.8 5.1% 59.27
2 South San Francisco 64,630 4,986 $5,230,835 38.99% 7.71 5.9% 57.67
3 Grass Valley 12,845 2,253 $927,948 43.81% 17.54 6.3% 57.31
4 Burlingame 29,237 4,071 $1,264,273 42.23% 13.92 4.4% 57.19
5 Palo Alto 65,234 10,175 $3,337,259 24.31% 15.6 4.3% 56.06
6 Fremont 218,172 19,240 $6,825,934 22.43% 8.82 5.5% 55.81
7 Monterey 27,939 4,156 $1,383,389 39.05% 14.88 4.6% 55.73
8 Los Gatos 29,809 4,444 $985,035 35.76% 14.91 4.2% 54.77
9 Walnut Creek 65,122 9,620 $1,588,865 32.38% 14.77 4.3% 54.34
10 Mill Valley 14,046 3,413 $399,712 21.51% 24.3 3.5% 54.11
11 Mountain View 75,477 7,844 $3,526,047 30.78% 10.39 5.6% 53.70
12 Menlo Park 32,450 4,691 $2,098,192 29.87% 14.46 4.4% 52.98
13 Pleasanton 71,488 8,309 $3,166,345 31.76% 11.62 5.4% 52.86
14 Sonoma 10,710 2,063 $908,927 28.36% 19.26 5.5% 51.42
15 Healdsburg 11,356 1,759 $1,352,177 33.48% 15.49 5.5% 51.35
16 Campbell 39,856 5,054 $958,168 37.81% 12.68 5.2% 50.79
17 Santa Clara 117,817 11,411 $2,638,478 33.56% 9.69 5.9% 50.40
18 Scotts Valley 11,618 1,414 $3,708,453 24.54% 12.17 5.7% 50.04
19 Lafayette 24,347 4,251 $502,556 23.19% 17.46 3.6% 49.18
20 San Rafael 58,162 9,998 $859,619 29.05% 17.19 5.3% 49.14
21 Placerville 10,383 1,452 $590,789 41.87% 13.98 9.4% 48.79
22 Benicia 27,225 3,180 $2,445,419 26.60% 11.68 5.2% 48.70
23 Larkspur 12,025 2,155 $584,828 27.24% 17.92 6.0% 48.64
24 San Carlos 28,779 4,458 $756,486 29.50% 15.49 5.6% 48.03
25 Orinda 18,108 2,908 $645,767 22.32% 16.06 3.0% 47.46
26 Martinez 36,471 3,479 $4,232,357 21.67% 9.54 6.3% 47.02
27 Los Altos 29,389 4,286 $386,439 21.82% 14.58 3.8% 46.83
28 Sunnyvale 143,315 11,126 $3,674,770 23.73% 7.76 6.1% 46.81
29 Foster City 31,259 3,402 $3,124,476 20.31% 10.88 5.1% 46.48
30 North Auburn 13,381 1,727 $577,558 29.70% 12.91 5.1% 46.40
31 Truckee 16,132 3,056 $336,066 32.66% 18.94 8.0% 46.02
32 San Ramon 72,707 7,174 $2,278,275 26.75% 9.87 5.1% 45.93
33 Cupertino 59,080 5,768 $2,343,632 21.20% 9.76 4.9% 45.36
34 Red Bluff 14,071 1,529 $511,606 41.20% 10.87 9.1% 45.16
35 Eureka 27,037 2,954 $886,769 33.11% 10.93 6.6% 44.82
36 Milpitas 67,695 5,918 $2,629,796 28.42% 8.74 5.9% 44.65
37 West Sacramento 49,061 3,506 $3,474,277 28.21% 7.15 7.9% 44.62
38 Live Oak 17,291 1,717 $742,278 35.35% 9.93 5.6% 44.55
39 San Francisco 817,501 105,030 $1,539,649 24.14% 12.85 5.7% 44.40
40 Susanville 17,001 777 $665,015 38.87% 4.57 5.4% 44.31
41 Redding 90,370 8,003 $731,837 36.85% 8.86 7.1% 44.04
42 Redwood City 78,241 8,369 $1,811,852 24.52% 10.7 5.3% 43.56
43 Novato 52,704 6,587 $975,327 25.67% 12.5 4.9% 43.25
44 Pleasant Hill 33,513 4,017 $1,311,560 23.90% 11.99 5.6% 43.07
45 Lathrop 18,630 712 $4,681,219 28.65% 3.82 8.6% 42.98
46 Livermore 82,442 7,402 $1,456,269 27.84% 8.98 5.0% 42.90
47 Rancho Cordova 66,027 4,264 $3,768,518 29.57% 6.46 10.1% 42.84
48 Berkeley 114,037 15,932 $661,215 21.06% 13.97 5.0% 42.64
49 Folsom 72,424 6,145 $1,046,683 28.93% 8.48 5.7% 42.54
50 Roseville 122,039 11,321 $1,657,422 26.82% 9.28 6.3% 42.09
51 King City 12,996 557 $1,977,894 51.53% 4.29 14.1% 42.08
52 Ukiah 15,946 1,914 $667,927 36.26% 12 10.6% 42.02
53 Tamalpais-Homestead Valley 10,394 2,010 $157,250 15.67% 19.34 5.0% 41.88
54 San Leandro 86,038 6,265 $2,154,592 29.34% 7.28 7.5% 41.59
55 San Mateo 98,601 11,260 $937,519 25.43% 11.42 5.5% 41.57
56 Napa 77,698 6,472 $741,149 33.71% 8.33 6.5% 41.53
57 Petaluma 58,357 7,226 $839,547 23.91% 12.38 5.6% 41.22
58 Albany 18,769 2,281 $255,256 23.45% 12.15 4.6% 41.14
59 Oroville 15,858 1,596 $666,268 33.58% 10.06 8.7% 41.13
60 Pacific Grove 15,241 2,157 $204,195 18.31% 14.15 4.2% 40.79
61 Danville 42,476 5,874 $416,145 21.74% 13.83 5.3% 40.77
62 South Lake Tahoe 21,448 2,580 $448,534 31.24% 12.03 9.0% 40.35
63 Pinole 18,587 1,798 $411,376 28.59% 9.67 5.6% 40.29
64 Half Moon Bay 11,555 1,639 $391,466 20.87% 14.18 5.5% 40.10
65 Alamo 15,672 2,097 $365,926 20.55% 13.38 3.2% 40.10
66 Chico 86,833 7,458 $723,946 30.16% 8.59 7.6% 39.53
67 Newark 43,139 3,081 $1,241,906 29.18% 7.14 6.1% 39.17
68 Madera 61,899 2,425 $851,692 32.74% 3.92 5.4% 38.99
69 Santa Cruz 61,245 7,116 $540,065 22.05% 11.62 5.1% 38.89
70 Moraga 16,315 1,742 $325,995 17.34% 10.68 4.0% 38.87
71 Santa Rosa 169,005 16,481 $728,411 28.12% 9.75 7.5% 38.68
72 Fair Oaks 31,493 3,611 $322,124 24.43% 11.47 7.6% 38.58
73 Anderson 10,025 777 $627,152 32.95% 7.75 8.7% 38.57
74 Morgan Hill 38,832 3,864 $1,018,344 26.11% 9.95 7.4% 38.53
75 Piedmont 10,852 1,468 $95,911 15.33% 13.53 3.9% 38.48
76 Concord 123,658 11,008 $1,361,632 25.32% 8.9 7.6% 38.22
77 Alameda 74,818 7,093 $1,235,737 20.20% 9.48 6.0% 38.16
78 Dublin 47,642 4,506 $889,745 19.80% 9.46 4.3% 38.14
79 Richmond 105,280 6,744 $3,305,861 18.76% 6.41 7.7% 37.81
80 Soquel 10,218 1,023 $316,224 22.29% 10.01 4.9% 37.80
81 Rohnert Park 41,039 2,902 $1,100,038 27.84% 7.07 7.1% 37.60
82 Salida 14,672 865 $1,917,163 28.32% 5.9 8.0% 37.59
83 Ripon 14,467 1,083 $865,234 22.53% 7.49 4.7% 37.45
84 Hayward 147,163 10,263 $1,627,439 30.97% 6.97 9.6% 37.42
85 Belmont 26,200 2,754 $1,182,049 14.09% 10.51 5.0% 37.37
86 Marina 19,966 1,383 $312,581 26.83% 6.93 5.4% 37.25
87 North Highlands 44,574 3,593 $892,532 24.88% 8.06 6.8% 36.95
88 Exeter 10,381 827 $301,844 31.08% 7.97 8.6% 36.76
89 Saratoga 30,335 3,532 $235,605 13.59% 11.64 4.0% 36.64
90 Granite Bay 22,948 2,911 $406,368 20.16% 12.69 5.8% 36.53
91 Paradise 26,219 1,881 $274,938 25.94% 7.17 6.1% 36.46
92 Lodi 62,703 4,190 $1,010,363 30.38% 6.68 9.5% 36.00
93 Gilroy 49,767 3,580 $990,504 30.61% 7.19 8.9% 35.91
94 Millbrae 21,867 2,699 $233,000 14.49% 12.34 4.3% 35.88
95 North Fair Oaks 14,981 1,150 $619,770 32.35% 7.68 8.9% 35.81
96 Arcata 17,559 2,213 $381,988 20.02% 12.6 8.2% 35.77
97 La Riviera 10,752 602 $1,187,721 31.23% 5.6 10.0% 35.73
98 Union City 70,687 4,820 $1,251,128 22.86% 6.82 6.1% 35.44
99 Oakland 397,011 39,382 $950,007 21.46% 9.92 8.4% 35.41
100 Rocklin 58,020 5,219 $683,506 21.84% 9 6.9% 35.39
101 San Jose 968,903 71,553 $1,399,517 22.59% 7.38 7.3% 35.26
102 Watsonville 51,544 3,110 $1,383,313 27.07% 6.03 7.9% 35.16
103 Arden-Arcade 91,914 8,833 $731,109 23.70% 9.61 9.5% 35.16
104 Dixon 18,524 1,126 $1,403,847 24.07% 6.08 7.3% 35.12
105 El Cerrito 23,862 2,678 $261,282 16.58% 11.22 6.1% 34.95
106 Sacramento 471,477 35,990 $1,202,126 25.16% 7.63 9.3% 34.93
107 Dinuba 22,325 859 $1,595,137 32.01% 3.85 9.9% 34.91
108 Marysville 12,144 1,084 $962,210 25.37% 8.93 10.3% 34.88
109 Clayton 11,137 1,214 $137,266 19.19% 10.9 5.9% 34.84
110 Chowchilla 18,296 657 $245,697 22.98% 3.59 3.3% 34.82
111 Visalia 125,502 9,425 $691,832 24.27% 7.51 7.7% 34.58
112 Fairfield 106,533 6,317 $1,162,401 23.60% 5.93 6.8% 34.48
113 Selma 23,538 1,402 $1,272,914 26.68% 5.96 9.2% 34.34
114 Merced 79,639 3,984 $1,164,109 30.02% 5 10.1% 34.27
115 Woodland 55,888 4,194 $680,530 22.77% 7.5 7.3% 34.17
116 Fresno 500,819 33,054 $1,010,921 27.32% 6.6 9.7% 33.99
117 El Dorado Hills 44,206 4,252 $885,867 16.02% 9.62 5.7% 33.98
118 Tulare 59,949 3,000 $1,009,380 25.67% 5 7.7% 33.81
119 San Bruno 41,581 3,296 $446,515 20.30% 7.93 5.6% 33.77
120 Turlock 69,185 4,062 $943,823 27.97% 5.87 9.6% 33.66
121 Davis 65,770 5,263 $244,323 16.32% 8 5.0% 33.48
122 Oakdale 20,943 1,829 $632,312 21.00% 8.73 8.5% 33.44
123 Rosemont 22,411 1,405 $821,887 25.12% 6.27 8.8% 32.82
124 Clovis 97,100 7,539 $479,065 20.59% 7.76 7.3% 32.77
125 Modesto 202,629 13,309 $1,008,658 26.29% 6.57 10.2% 32.75
126 Porterville 54,534 3,239 $595,722 26.71% 5.94 9.1% 32.68
127 Windsor 26,863 2,507 $404,528 17.83% 9.33 6.0% 32.50
128 Salinas 152,340 7,976 $1,070,924 23.14% 5.24 7.5% 32.35
129 Castro Valley 61,637 5,330 $256,047 16.51% 8.65 6.0% 32.05
130 Lemoore 24,616 1,302 $1,119,129 23.20% 5.29 9.0% 31.59
131 Cameron Park 18,258 1,636 $276,579 16.93% 8.96 6.6% 31.58
132 Coalinga 16,609 505 $639,705 18.02% 3.04 4.5% 31.56
133 Yuba City 64,911 4,460 $639,531 24.66% 6.87 9.8% 31.45
134 Reedley 24,562 1,175 $452,912 27.06% 4.78 8.9% 31.43
135 Stanford 13,495 993 $204,901 6.95% 7.36 2.2% 31.19
136 Brentwood 52,494 4,061 $543,790 17.26% 7.74 5.7% 31.17
137 Hanford 54,195 3,171 $610,648 22.17% 5.85 8.7% 30.67
138 Pacifica 37,825 3,539 $168,717 13.37% 9.36 5.3% 30.24
139 Carmichael 61,659 4,147 $231,132 22.74% 6.73 9.4% 30.21
140 Seaside 33,402 1,676 $429,843 24.11% 5.02 7.3% 30.09
141 Stockton 294,406 16,488 $1,036,849 24.10% 5.6 10.6% 30.05
142 Orangevale 33,832 3,034 $193,277 19.41% 8.97 9.1% 30.02
143 Citrus Heights 84,218 6,876 $424,067 20.64% 8.16 9.6% 29.99
144 Shasta Lake 10,135 864 $266,168 14.12% 8.52 6.8% 29.96
145 Tracy 83,452 5,979 $1,099,164 20.71% 7.16 9.7% 29.74
146 Lincoln 43,467 3,399 $349,182 13.83% 7.82 5.8% 29.62
147 Hercules 24,340 1,903 $523,564 12.30% 7.82 4.8% 29.52
148 Soledad 26,039 651 $360,332 21.66% 2.5 5.3% 29.06
149 Prunedale 18,941 1,594 $195,777 16.12% 8.42 6.7% 29.05
150 Elk Grove 155,350 12,520 $532,107 14.29% 8.06 7.3% 28.54
151 Hollister 35,558 2,417 $567,979 20.73% 6.8 9.6% 27.96
152 Pittsburg 64,588 3,386 $1,021,678 16.51% 5.24 8.1% 27.77
153 Ashland 22,900 1,035 $225,786 20.19% 4.52 7.7% 27.68
154 Cherryland 14,873 712 $141,077 22.47% 4.79 8.9% 27.57
155 San Pablo 29,324 1,407 $320,539 24.02% 4.8 10.1% 27.43
156 American Canyon 19,656 1,244 $868,232 14.95% 6.33 7.4% 27.17
157 Vallejo 117,079 7,876 $576,811 18.88% 6.73 10.3% 26.83
158 Los Banos 36,219 1,851 $629,613 22.20% 5.11 11.3% 26.57
159 Manteca 69,168 4,247 $512,801 21.59% 6.14 11.1% 26.47
160 Rio Linda 15,256 999 $89,669 15.62% 6.55 7.8% 26.45
161 Florin 51,051 1,255 $1,041,255 23.98% 2.46 11.2% 26.45
162 Daly City 102,605 7,100 $363,030 13.32% 6.92 6.8% 26.42
163 Antioch 104,035 6,274 $517,636 17.87% 6.03 9.1% 26.38
164 Ceres 46,022 2,657 $553,202 21.34% 5.77 11.4% 26.13
165 Sanger 24,393 956 $473,335 21.65% 3.92 10.4% 25.36
166 Suisun City 28,350 1,352 $340,567 14.64% 4.77 7.2% 25.11
167 Lindsay 12,377 532 $411,996 25.00% 4.3 12.9% 24.51
168 San Lorenzo 24,057 1,630 $365,815 13.44% 6.78 8.9% 24.11
169 Riverbank 22,977 1,254 $512,970 18.42% 5.46 11.4% 24.08
170 Patterson 20,480 918 $464,756 17.32% 4.48 10.2% 23.64
171 Oakley 36,443 2,432 $180,132 11.72% 6.67 8.6% 22.96
172 Magalia 11,513 838 $87,891 9.19% 7.28 10.0% 21.90
173 Vineyard 25,480 1,484 $127,063 8.29% 5.82 7.1% 21.71
174 East Palo Alto 28,597 1,078 $644,435 9.55% 3.77 8.5% 19.82
175 Foothill Farms 33,052 817 $222,673 11.26% 2.47 9.4% 18.95
176 Livingston 13,301 649 $1,575,336 10.17% 4.88 14.3% 17.44
177 Bay Point 21,582 974 $623,614 8.32% 4.51 12.9% 15.49

Methodology

We analyzed 177 places in Northern California with populations of 10,000 and above. We excluded eight places that had fewer than 500 businesses and 24 places that were missing data from the U.S. Census Bureau’s Survey of Business Owners.

The overall score for each community was calculated using these criteria:

Business climate, 65% of the overall score, is based on three metrics from theU.S. Census Bureau’s Survey of Business Owners.
Average revenue of businesses is 20% of the score. A higher average contributed to a higher score.
Percentage of businesses with paid employees is 25% of the score. A higher percentage contributed to a higher score.
Businesses per 100 people is 20% of the score. A higher number contributed to a higher score.

Local economic health, 35% of the overall score, is based on three metrics from the U.S. Census Bureau’s American Community Survey.
Median annual income is 10% of the score. A higher median income contributed to a higher score.
Median annual housing costs are 10% of the score. Lower median costs contributed to a higher score.
Unemployment rate for residents over 16 years old is 15% of the score. A lower rate contributed to a higher score.

NerdWallet staff writer Teddy Nykiel contributed to this article.

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