The strongest predictor of rural entrepreneurship activity isn't financial capital, broadband or education. It's natural capital.

• Natural capital is a community's landscapes, recreation assets, water, topography and other place-based amenities.

Why it's important: Business creation fuels jobs, builds wealth that stays local and gives communities more control over their economic futures.

A new report from the Capital One Insights Center and Center on Rural Innovation (CORI) finds that, in rural counties, natural capital is the strongest and most consistent predictor of rural entrepreneurship.

• To examine what helps entrepreneurs start and grow businesses in high-performing rural communities, researchers analyzed seven forms of community capital: natural, human, cultural, social, built, financial and political.
• The research supports Capital One's broader strategy to advance economic opportunity through its five-year, $265 billion Community Benefits Plan, which includes increased access to credit for small businesses in rural and low-to-moderate-income communities, strengthening community development financial institutions and investing in local economic infrastructure.

The findings: The research suggests rural communities may be better served by investing in the assets they already have and those that set them apart.

🧭 The Rural Entrepreneurship Index, developed by the Capital One Insights Center and CORI, measures the strength of entrepreneurship ecosystems across rural counties nationwide.

• Higher percentiles indicate a more robust and dynamic entrepreneurial environment.

Beyond natural capital, the research shows that specific community assets — and how they're put to work — can matter more than the overall amount of any one form of capital.

🏔️ Place can be an economic asset. Among natural-capital measures, water area and topographic variation most reliably predict rural entrepreneurship.

• But not every community needs mountains, lakes or a particular climate. What matters is how deliberately communities build on the natural assets they already have.

📈 An older population can be an entrepreneurial advantage. Median age is positively associated with rural entrepreneurship.

• The mean founding age among the fastest-growing new ventures is 45.
• Years of industry experience and training can make it easier to recognize a market gap or unmet need.

🏗️ Infrastructure alone isn't enough. Built capital — like broadband, roads and housing — isn't significantly associated with stronger entrepreneurship in rural counties on its own.

• Instead, infrastructure appears to function as a foundation. Its economic payoff depends on how deliberately communities put it to use.
• For example, broadband can deliver greater value when paired with coworking, mentorship and other startup support.

🏛️ Traditional economic development incentives don't tell the whole story. Political capital is the only form of community capital consistently associated with less entrepreneurship.

• The report points to the importance of broadly shared investments — including broadband, workforce training and child care — rather than incentives concentrated on individual businesses.

🤝 Relationships can matter more than institutional investment. Broad measures of financial and social capital can mask some of the connections that matter most to rural entrepreneurs.

• CDFI lending, business associations, veteran populations and nonprofits are positively associated with stronger rural entrepreneurship.
• The findings suggest relationship-driven connections to lenders, customers, mentors, investors and other small business owners can be more important than simply having more institutions.

📍 An example: As a case study, Bozeman, Montana, shows how different community assets can reinforce one another.

Key numbers: Gallatin County, Montana, ranks in the 98th percentile nationally for human capital and the 92nd percentile for financial capital — yet just the 24th percentile for social capital.

• Even so, entrepreneurs interviewed for the report repeatedly described relationships, "one degree of separation" and warm handoffs as local advantages.

Bozeman has also intentionally connected its assets.

• Montana State University links research and talent with local entrepreneurs. Coworking and innovation spaces bring small business owners together. Investments in broadband and airline service connect businesses with talent and outside capital.

Looking ahead: The research points toward a different way of thinking about rural economic development. Rural communities don't need to build every form of community capital equally or to become something they're not.

• Instead, the report suggests identifying existing assets that already provide an advantage, investing in them deliberately and strengthening the connections between them.

Read the complete report.