1. San Antonio

As the seventh largest city in the U.S. and with the biggest chunk of its population between 25 and 34, San Antonio is a perfect place to add to the rising cities list.

The city is pouring money into revitalizing its downtown area to encourage young professionals to make San Antonio their permanent homes as well as developing its angel investor and venture capital networks to help address the needs of smaller startups.

"San Antonio has always had a very strong small business presence," says Rene Dominguez, director economic development for the City of San Antonio.

"We have some industries that really lend themselves to small-business formation and growth like the tourism industry. There are a lot of small-business opportunities within that industry from restaurants to retail," he says. "More recently there are emerging industries that are very conducive to small business such as IT and cyber. We have a very strong small-business cyber-community here."

One of the more recent sparks for small business is the support by Rackspace (RAX) founder Graham Weston.

"Rackspace has a desire to make San Antonio an IT, tech-driven community and it matches up with the city's goals as well," Dominguez says.

>>>Rackspace Not on 'Cloud 9' Anymore

From establishing Geekdom, a collaboration space that is a point of concentration for tech and entrepreneurialism in San Antonio, and a major supporter behind TechStars Cloud, a San Antonio-based accelerator launched in January 2012 that funds companies focused on cloud computing and cloud infrastructure.

"San Antonio has a lot to offer tech startups," says Jason Seats, managing director of TechStars Cloud. "The community is small, but concentrated and because of initiatives like Geekdom it's very easy for newcomers to get acclimated and meet everyone. Local investors are just getting the angel-investing bug and there is healthy support to see San Antonio-based companies succeed."

Startups are also launching within the biotech and medical device industry, particularly with unique assets to the city like University of Texas' Health Science Center and several biotech incubators, such as T3DC, that all lend themselves to fostering small business creations, Dominguez says.

Among its myriad of city-supported programs and initiatives, the San Antonio Economic Development Corporation (SAEDC) was created in 2010 by the city council to help spur the development of innovative companies and bring high-paying jobs to the city. It has the authority to make equity investments in companies, mainly within bioscience and health care. The investment funds are provided through grants approved by City Council to the SAEDC.

"We're not necessarily venture capitals because we're not looking for risky ventures," Dominguez says. "We're looking for projects that are focused on economic development."

Most recently though, the city announced plans to launch Cafe Commerce, a clearinghouse aimed at becoming a one-stop-shop incubator for small companies.

Similar to Geekdom, which focuses on the tech industry, Cafe Commerce will give business owners access to resources, market data and other assistance needed to launch businesses as well as a physical location for collaboration. Mayor Julian Castro introduced the initiative in his State of the City speech last month.

Alex Lopez, the assistant director of the city's small business office, says San Antonio was lacking an easy way to find all the resources available to entrepreneurs and small-business. The program's physical location will likely be in the city's Central Library. The city also plans to use US SourceLink and the Ice House Entrepreneurship Program, both developed with support from Kauffman Foundation, to centralize the business resource information.

Another major component of the initiative is the creation of curriculum to learn more about entrepreneurism - not just the logistical aspects of starting a business, but to "develop that kind of thinking," especially among the city's youth, Lopez says.

If you liked this article you might like

The 10 Best Jobs in America for 2016

20 Best Colleges for Campus Food

10 Consumer Stocks With the Highest Earnings Growth Last Quarter

5 Stocks Dumped by Hedge Funds Last Quarter

15 Most Lucrative Jobs in the Tech Industry