A recent Citybizlist article comments on the growing numbers of millennials who are taking the path of entrepreneurship. Hoping to become the next Mark Zuckerberg, almost 160,000 startups were launched every month in 2011, according to a report by the U.S. Chamber of Commerce Foundation. As the article notes, however, any entrepreneur, and especially a young one, needs more than just a great idea to get a business off the ground. Funding, mentorship, networking opportunities and a city's affordability all play pivotal roles in the success of a new small business.

With this in mind, NerdWallet took a look at the best U.S. cities for young entrepreneurs by analyzing the following factors:

1. Access to funds. NerdWallet looked at small business loans in each city—the dollar value of commercial and industrial, or C&I, loans under $250,000 lent per capita in 2013 by banks with less than $10 billion in total assets.

2. Networking and mentorship. For those just starting a business, the right environment—surrounded by successful business leaders—is key, so NerdWallet included the number of businesses for 100 residents in a city's metro area. To assess the availability of peers for networking, NerdWallet included the percentage of residents in each city age 25 to 34 as well as the percentage of the population over 25 with at least a bachelor's degree.

3. Local economy. NerdWallet analyzed the local economy of the cities through its per capita income and unemployment rate.

4. Affordability. Minimizing costs is important when starting a business, so NerdWallet included a cost-of-living index as a proxy for affordability.

Key findings

  • Capital area advantage. Arlington, Virginia, is the best city for young entrepreneurs, having a high percentage of educated young people, the highest per capita income in the nation and access to businesses in the Washington, D.C., area.  
  • Midwest's strength. Powered by a range of positive measures, Midwest cities—Madison, Wisconsin; Lincoln, Nebraska; and Minneapolis, Minnesota—earned spots on the list's top five.  
  • California's challenge. Despite being home to many of the biggest tech giants of the past decade, most California cities score poorly as places for young entrepreneurs. San Francisco is the state's highest on the list at No. 23, and four of the bottom 10 cities are elsewhere in the state. The only West Coast cities in the top 20 are Seattle, Washington, and Portland, Oregon.

Based on the factors analyzed by NerdWallet, Atlanta placed #16 on the list of best cities for entrepreneurs. Here is a look at some of the other best cities for young entrepreneurs:

1. Arlington, Virginia

Arlington earns the top spot thanks to its large young and well-educated population. Nearly 28% of the city's residents are 25 to 34 years old, and at least 74% of all residents over 25 hold a bachelor's degree or higher — both of these figures are the highest in the nation. The local economy is also quite robust, with a low unemployment rate and the highest per capita income of all places on our list. Female entrepreneurs connect at Arlington Women Entrepreneurs to network and collaborate with peers.

7. Austin, Texas

Austin is increasingly becoming known as a hotbed for startups, especially tech companies. The city boasts a young, growing and well-educated population, as well as a low cost of living and unemployment rate. Austin also offers many local resources for budding entrepreneurs, such as the Small Business Development Program.

12. Raleigh, North Carolina

NerdWallet determined that Raleigh is the 12th best place for young entrepreneurs in the nation. Raleigh has an excellent pool of candidates to hire from since nearly 50% of the city's population over age 25 holds a bachelor's degree. The city also has a relatively low unemployment rate at 5%.

14. Washington, D.C.

Washington, D.C. has an excellent hiring pool from which young entrepreneurs can hire. More than 55% of its residents age 25 and over have a bachelor's degree. The city also has one of the highest per capita incomes of cities featured in the study at $45,477. D.C. fell to number 14 on NerdWallet's list due to a difficult loan environment, with only $18.66 in C&I loans per capita.

16. Atlanta, Georgia

There are $283.48 of C&I loans per capita in the city and 48.4% of the city's residents 25 and over hold a bachelor's degree. The city fell to number 16 due to its higher unemployment rate and lower per capita income.

20. Orlando, Florida

Orlando was the only Florida city to make NerdWallet's top 20 best cities for young entrepreneurs. There are $386.85 of C&I loans per capita in Orlando and the unemployment rate is 5.7%. However, the city's per capita income is only $24,822 and only 35% of residents 25 and older have a bachelor's degree.