10 most entrepreneurial states

• 2012 startup rate: 530 per 100,000 adults

Montana has fast become the no. 1 state for startup activity, according to the annual Kauffman Index of Entrepreneurial Activity, having raced to the top spot this year from a 17th-place ranking a year earlier,

Thanks in large part to Montana's vibrant oil and gas industry, people were more likely to launch businesses here than in any other state in the country last year. Many firms are sprouting up in northeast Montana around the booming Bakken fields, where demand is huge for products and services to meet the oil industry's needs.

The state also has a growing technology hub in Bozeman, where startups can find incubator space and funding opportunities at schools such as Montana State University.

While Montana's housing costs and personal income taxes are relatively high, other living costs there tend to be low, and there's no sales tax.

NEXT: Vermont