Gusto’s Annual New Business Formation Report Finds 60% of Founders Used AI to Launch — Double the Rate from Three Years Ago — as a New Generation Rewrites the Rules of American Entrepreneurship
SAN FRANCISCO, May 14, 2026 /PRNewswire/ — Gusto, the leading partner for small businesses, today released its sixth annual New Business Formation Report, revealing a historic milestone in American entrepreneurship: for the first time ever, Gen Z has surpassed Baby Boomers in new business starts. Based on a survey of 1,051 founders who launched businesses in 2025, the report paints a portrait of an entrepreneurial generation that is younger, more diverse, and more AI-native than any cohort before it.
Gen Z accounted for 9% of new businesses started in 2025, compared to just 5% started by Baby Boomers — a generational crossing that marks a fundamental transformation in who is building the American economy.
“For years, the barriers to starting a business — capital, expertise, time — kept countless aspiring entrepreneurs on the sidelines. AI is removing those barriers. What we’re measuring in this report isn’t just a technology trend. It’s a structural shift in who gets to participate in the small business economy,” said Nich Tremper, Sr. Economist at Gusto.
AI at the Center of a New Era of Entrepreneurship
The 2026 report reveals that artificial intelligence has become a foundational tool for new business creation. 60% of 2025 founders used AI to help launch their businesses — up from just 21% in 2023 — and AI adoption in day-to-day operations has more than doubled across every major sector, rising from 21% to 44%.
Gen Z entrepreneurs are leading the AI charge: 71% of Gen Z founders used AI to launch their business, compared to 42% of Baby Boomers. Gen Z entrepreneurs were five times more likely than Baby Boomers to say they likely would not have started their business without AI.
The data also challenges the conventional wisdom that AI destroys jobs. New businesses that use AI in operations are more likely to plan for headcount growth in 2026 (49%) than those that do not (41%) — and hiring plans overall hit a three-year high, with 44% of new businesses planning to add employees in 2026. AI-using businesses are also twice as likely to receive venture capital or angel funding (18% vs. 9% for non-AI-using businesses).
The Face of Entrepreneurship Is Changing
The 2026 report reveals that American entrepreneurship is growing more diverse on every dimension:
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More than 1 in 3 new founders (37%) are first- or second-generation immigrants, including 12% who are first-generation and 24% who are second-generation.
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Women led 69% of new Black-owned businesses started in 2025 — the third consecutive year that Black women have outnumbered Black men in new business formation.
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AAPI women started 51% of new AAPI-owned businesses in 2025.
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Gen Z women made up 47% of Gen Z-owned businesses in 2025, up from 38% in 2024 — even as Baby Boomer women’s share fell sharply.
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Nearly half of AAPI Gen Z entrepreneurs (46%) received venture capital or angel funding — six times the rate of White Gen Z founders.
