Breaking Barriers: Study Shows Increased Diversity in New Business Start-ups During the Pandemic

Record numbers of people are starting new businesses, with a significant increase in the number of women and minorities, according to a new study. The surge in new business applications began at the start of the pandemic in 2020 and has continued to grow at an unprecedented pace. In 2021 and 2022, more than 5 million new business applications were filed each year, and in 2023, a record 5.5 million applications were submitted.

Gusto conducted a survey of over 1,300 small business owners who started their businesses last year to identify their characteristics. The study found that women made up nearly half (49%) of the new business owners surveyed, which is a significant increase from just 29% in 2019. Despite this progress, women entrepreneurs continue to receive less interest from investors than their male counterparts. Only 3% of women entrepreneurs received private capital investments in 2023 compared to 9% of male entrepreneurs.

When it comes to minority entrepreneurship, Black entrepreneurs made up just 6% of new business owners in 2023 compared to only 3% before the pandemic. However, Hispanic entrepreneurs saw an increase from just 8% the previous year to make up an impressive 13% of new business owners in the latest study. Additionally, more businesses are being started as “side hustles” that supplement day jobs than ever before. In fact, over half (44%) of all entrepreneurs surveyed started their businesses while working another job in either part-time or full-time capacity – up significantly from just over one-third (27%) who did so in the previous year.

Overall, this research highlights the growing trend towards entrepreneurship and offers valuable insights into who is driving this growth and how they are funding their ventures.