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5. Bethesda, Md.
Population: 59,475
Pro: Extremely well-educated labor pool
Con: D.C. traffic

Bethesda boasts one of the country's best-educated populations for a city of 50,000 or more: more than 80% of its residents have at least a bachelor's degree. Low crime, rapid job growth and easy access (at least without rush-hour traffic) to airports and downtown Washington D.C. make Bethesda attractive to many entrepreneurs - and business opportunities up the appeal.

Three of the area's business innovation centers are within six miles of the town. Not only can tech startups rent the space and share facilities (video conferencing and the reception area, for instance), the county will provide legal counsel through lawyers at the University of Maryland and fiscal advice from financial services companies. While some owners say that navigating Montgomery County's various regulations can make launching tricky, the county eases the process for eligible firms with tax credits for creating jobs, expanding, and - if you're an artist - simply living and working in Bethesda.

The city also is a foodie hub, with over 250 restaurants. Every year, thousands of guests attend the annual Taste of Bethesda festival, where they're treated to dishes from dozens of local restaurants and music performances on four stages. -Kelsey Abbott

Interactive map: Bethesda, Md.
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NEXT: 6. Portland, Ore.

Last updated July 02 2008: 11:16 AM ET
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