Gen Z Founders Surpass Baby Boomers in New Business Starts, Gusto Report Finds

Gusto announced in a press release that Gen Z entrepreneurs have surpassed Baby Boomers in new business formation for the first time. The finding comes from Gusto’s sixth annual New Business Formation Report, based on a survey of 1,051 founders who launched businesses in 2025.

According to the report, 9% of new businesses in 2025 were started by Gen Z founders, compared to 5% by Baby Boomers. The study highlights a sharp increase in AI usage among entrepreneurs, with 60% of founders using AI to help launch their businesses, up from 21% in 2023. Among Gen Z founders, 71% reported using AI, while only 42% of Baby Boomers did.

AI adoption in daily operations has also risen, from 21% to 44% across all sectors. Businesses that use AI are more likely to plan employee growth in 2026, with 49% expecting to hire compared to 41% of those not using AI. These businesses were also twice as likely to secure venture capital or angel funding.

The report shows that American entrepreneurship is becoming more diverse. Thirty-seven percent of new founders are first- or second-generation immigrants, and women led 69% of new Black-owned businesses. Among Gen Z entrepreneurs, women represented 47% of founders in 2025, up from 38% a year earlier.

Motivations for starting a business are also shifting. While autonomy remains important, 51% of founders cited financial stability as their main reason for launching a business, up from 42% in 2024. Gusto’s report reflects a younger, more diverse generation of business owners relying on AI to lower barriers to entry and drive growth.