U.S. Census Bureau data reveals a major spike in entrepreneurs filing applications for new businesses in 2023.
According to Gusto’s 2024 New Business Formation Report, women and minorities have been at the forefront of this entrepreneurial boom — despite facing challenges in accessing funding.
Surveying 1,300 business owners who launched companies in 2023, Gusto’s data reveals women accounted for nearly half (49%) of all new business owners in 2023, which is a significant increase from just 29% recorded in 2019. However, the data also reveals female entrepreneurs received less interest from investors compared to their male counterparts, with only 3% of women receiving private capital investments versus 9% of men.
Black, Hispanic, and Asian Pacific American entrepreneurs also recorded notable growth over previous years. The share of Black/African American entrepreneurs is reported to have doubled from 3% in 2019 to 6% in 2023. Meanwhile, Hispanic entrepreneurs represented 14% of new business owners — the highest rate in the survey’s three-year history. These groups often cited financial stability and asset building as key motivators for starting their businesses.
The adoption of generative AI has also been a game-changer for new businesses, with at least 22% of firms reported to be using these tools in their operations. Moreover, marketing emerged as the most popular use case, with 76% of AI-adopting businesses applying the technology to content creation and market research.
The data also suggests that investors have taken notice, with AI-focused companies reportedly receiving more private capital investments and launching with considerably more funding than non-AI companies.
It’s also worth noting that small businesses are promoting flexible work environments. According to the report, “more than a third (35%) of new businesses hired fully remote employees in 2023, up from 22% in 2022. Meanwhile fewer new businesses are focusing on new hires to work on-site full-time.”
The rise of “side hustles” has also played a significant role in 2023’s entrepreneurial landscape. The data reveals 44% of new business owners started their companies while working for another employer — up from the 27% recorded in 2022.
The data suggests the importance of investors supporting diverse entrepreneurs in their pursuit of ideas, innovation, and financial independence. By addressing funding disparities and leveraging new technologies, more talent could have the potential to drive economic growth and shape the business landscape this year, and beyond.
