Report: DC has the most growth companies making money

For the second year in a row, D.C. came out on top of the Kauffmann Index of Growth Entrepreneurship.

The report, prepared by the Kansas City–based Kaufmann Foundation, looks across industries to compare how cities are fostering entrepreneurial businesses. It’s measured on three criteria, including rate of startup growth, “scale-ups” (or firms younger than 10 years old that went from startup to growth company) and density of high-growth companies.

While D.C. (and Northern Virginia) did well enough on each of those criteria to maintain its top ranking, the performance on the latter category stands out. The District’s density of high-growth companies is far above that of other cities. D.C. has 306.8 such companies per 100,000 employer businesses. The only other company within 100 of that is Austin, with 238.1, and no others fall above 200.

These high-growth companies can be any age and are across industries, but have one common thread: revenue. To be considered in this group, firms must have “$2 million in revenue and 20 percent annualized growth over a three-year period,” the report states.

It may seem like making money is what businesses are required to do to survive. But in a startup world where venture dollars often stand along with revenue for growth, it’s a standout point. So while San Jose posted the top startup growth rate and San Francisco had the most exits, D.C. was tops when it came to building businesses to sustain themselves by taking in cash.

When seeking an identity, there are worse things to be known as than “the city that makes money.”

The fact that all of those businesses densely located can also bode well for the whole community. For startups, it’s a reminder that there are lots of firms around that could be potential partners.