More solo founders, growing faster, powered by AI
By Ernie Tedeschi, Marisa Rama, and Chris Cruickshank. Excerpts:
"This post advances three related arguments. First, solopreneurship
is growing faster than employer-business formation, and the
acceleration is validated by multiple independent data sources, making
it unlikely to be driven by a fraud wave. Second, both the number and
share of solopreneurs reaching meaningful income thresholds is rising.
And third, early signals indicate that AI is filling the capability gaps
that once made hiring necessary—and doing so fast enough to show up in
the income distribution.
New business applications in the Census Bureau’s Business
Formation Statistics have been flashing an unusual signal for the past
18 months. New business applications are filings with state agencies and
the Internal Revenue Service that precede actual commercial activity.
These new applications reaccelerated beginning in late 2024, after
spiking in 2020 at the beginning of the pandemic and remaining elevated
thereafter.
This acceleration, however, is not being
driven by applications from businesses that have a “high propensity” or
likelihood to become employers."
"Businesses that signed up on Stripe after 2023 reached material
transaction volumes earlier than the sign-up cohorts that preceded them.
The share of businesses (not just solopreneurs) reaching $1 million in
cumulative revenue within a year after going live on Stripe was roughly
30% higher for the 2025 cohort as it was for the 2023 cohort, and it was
roughly 3x higher for the 2025 cohort than the 2019 cohort. If more
recent sign-up cohorts were increasingly driven by inactive businesses,
we would expect more time to material volume thresholds, not less."
"the story of spiking business applications is not confined to the
United States. New business registrations have risen roughly 40% in
Australia, 70% in Finland, and 80% in France since 2017, with meaningful
acceleration in 2025 alone. Multicountry acceleration across different
regulatory environments argues for a more fundamental driver than fraud
activity. And in France, where more granular data is available, the
surge in business formation is driven primarily by solo founders or
microentrepreneurs rather than by traditional employer
businesses—similar to the US."
"In 2023, roughly four million Americans earned their primary
income as solopreneurs, generating over $100,000 in annual revenue.
That figure has risen substantially from the mid two-million range of
the early 2010s"
There is "a consistent upward trajectory in both the count and share of solopreneurs earning above various income thresholds."
"We find that there has been a substantial increase in the
number of solopreneurs earning over $100,000 in our index, but an even
larger increase in the number earning at higher income thresholds, with a
clear acceleration since 2023. More than twice as many solopreneurs
earned over $1 million in 2025 than in 2023, and close to three times as
many crossed $5 million and $10 million.
Perhaps even more interestingly, the share
of solopreneurs earning above these income thresholds has also doubled
in the last two years, suggesting that—rather than the surge in business
applications reflecting low-quality experimentation with a few lucky
standouts— the cohorts of new solopreneur businesses might actually be
of higher quality than in the past."
"It seems likely that AI is one of the primary drivers of both the acceleration in solo business formation"
"An agent can now help you find the best tools for your business and handle your integration with minimal support."
"The recent growth in nonemployer businesses shows a positive
relationship with industry-level AI adoption, suggesting that higher AI
adoption has been broadly consistent with more growth in nonemployer
applications"
"Part of the reason businesses historically tended to be built by
groups was that a single individual rarely possesses all the skills
needed in the entrepreneurial journey. Whether it’s how to evaluate or
size a market, code an app, price a product, write and execute a
marketing campaign, or close a deal, AI (and AI-augmented software) can
fill many of the gaps that founders previously turned to another human
for."
While
the recent surge in US business formation is not reflected in
high-propensity applications, the evidence points toward a structural
increase in genuine small business activity over 2025 and 2026, driven
by solopreneurs. Preliminary evidence of growth in AI tool usage and
solopreneur growth in high-AI-adoption sectors suggests that advances in
AI are responsible for a meaningful portion of this growth. We believe
AI is lowering barriers to business formation and growth by expanding
the capabilities of solopreneurs, further improving tools and platforms
that cater to new businesses, and creating a new set of opportunities
for entrepreneurs to pursue. Whether the magnitude of this effect is as
large as the most optimistic readings of the data suggest remains to be
seen, but we believe we might be in the early innings of a fundamental
acceleration in business formation—which could have ripple effects
throughout the economy."
