Key facts
- New business applications in the U.S. reached a record 5.7 million last year.
- The current entrepreneurial surge is attributed to pandemic-related factors and the rise of AI.
- Nearly 60% of founders on the Gusto platform reported using AI in their businesses.
- AI tools are making it cheaper and faster to start businesses, acting as virtual collaborators.
- Half a million businesses were formed in 2023, indicating a sustained trend of new business creation.
America is experiencing a significant surge in entrepreneurship, with new business applications reaching record highs after decades of stagnation. This trend, jump-started by the pandemic and further accelerated by artificial intelligence, is seen as a positive development for the economy, driving innovation and potential job growth.
Last year, Americans filed 5.7 million applications to start new businesses, the most in the two decades the Census Bureau has tracked this data. Applications through the first half of this year have continued to increase. While data on actual business formations lags, 2023 saw half a million businesses formed, a slight decrease from the prior year but consistent with an upward trend.
Economists point to several factors fueling this entrepreneurial renaissance. The pandemic's mass layoffs and the shift to remote work pushed many individuals to start their own ventures. Generous government stimulus and low interest rates provided financial cushioning, while a potential realignment of personal priorities may have made more people willing to pursue long-held business ideas.
Artificial intelligence is also playing a crucial role. A study from the University of British Columbia and Stockholm School of Economics found that generative AI is spurring entrepreneurial activity by creating new ventures and reducing the cost of starting businesses. AI tools, such as chatbots, are acting as virtual collaborators, answering questions, performing tasks, and even writing code, thereby lowering barriers for aspiring founders.
Data from Gusto, a small-business payroll service, indicates that nearly 60% of founders on its platform used AI last year, with half reporting that the technology made their ventures cheaper and faster to launch. This democratization of entrepreneurship, facilitated by accessible online resources like e-commerce platforms and digital marketing services, empowers a new generation of founders across various industries, particularly in tech.