SmartAsset’s newest study ranks Arizona No. 23 among America’s Most Innovative States. The analysis examines patent data, venture capital investment, and R&D spending to identify where innovation is happening in the U.S. 

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Among the study’s key findings: 

  • In the most recent year, Arizona attracted $478 in per capita venture capital investment, and $1,541 in per capita R&D spending. 
  • Arizona had 35 patents issued per 100,000 residents. 
  • Six states — Idaho, Wyoming, California, Washington, Oregon, and Colorado — form America’s “Innovation Belt”; the largest group of contiguous states ranked in the Top 10.

Innovation can attract investment and reshape economies. The U.S. Economic Development Administration identifies innovation as a driver of global competitiveness, job creation and economic growth. However, innovation activity varies substantially by region. Some states generate more patents, support greater research and development activity, and attract more venture capital than others, giving them a stronger foundation for developing and commercializing new ideas.

SmartAsset analyzed the 50 states to identify where innovation activity was most concentrated. The analysis examined three per capita metrics: patents issued; research and development expenditures by businesses, universities and government agencies; and venture capital (VC) deal value — the total amount invested in startup companies through VC transactions. The metrics were combined into a composite score used to rank each state.

Key Findings

  • Six Western states form America’s “Innovation Belt.” California (No. 1), Washington (No. 4), Oregon (No. 5), Colorado (No. 6), Wyoming (No. 8) and Idaho (No. 10) make up the largest contiguous group of states ranked in the top 10.
  • The gap between the highest- and lowest-ranked states is substantial. No. 1 California attracted nearly $5,000 in venture capital per capita and produced 129 patents per 100,000 residents. By contrast, No. 50 Mississippi attracted only $2 per capita and produced four patents per 100,000 residents.
  • States rank highly through different innovation strengths. Massachusetts leads in research and development spending per capita. Venture capital drives the rankings of Delaware and Wyoming, while Washington combines high patent activity with substantial research spending.
  • Innovation does not require a startup-heavy ecosystem. Idaho ranked in the top 10 despite attracting relatively little venture capital. Its performance was driven by significant research and development spending — including more than $600 million through Idaho National Laboratory — as well as relatively high patent activity supported by established companies such as Micron and HP.