Every year, the University of Nebraska-Lincoln ranks U.S. states’ entrepreneurial climates, based on five indicators: business growth (per capita and as a percentage), business formation, patents per capita, and income per proprietor. And this year’s ranking, released yesterday, places Massachusetts first in the nation.

“To reach the top of the rankings, a state had to do very well in at least four of the five categories that made up the index,” said UNL associate professor of economics and director of the bureau in a release. “This year, those states tend to be clustered in the Northeast and the upper Midwest. That’s not to say there is not significant action in other regions of the country, of course, but our data shows this year’s entrepreneurial activity has a definite northern flavor.”

The ranking is based on 2011 data, and Massachusetts excelled in business growth, patents and income. Revisions to last year’s data also put the state in the top spot for 2010. But the one area where the Commonwealth didn’t stand out was business formation, i.e. the number of new establishments founded in a state per capita. By that metric, Massachusetts was 29th.

That leads to a sort of paradox. Massachusetts is a great place to run a business, but not that many get started here. Click here to read the full report.