Immigrants Started Nearly 1 in 5 New Businesses in 2023

Nich Tremper

Key Findings

  • Immigrants Start Nearly One-in-Five New Businesses: Immigrants make up 14% of the U.S. population, but founded 17% of new businesses in 2023. The children of immigrants also started 17% of new businesses last year.
  • Immigrant-Owned Businesses Create More Jobs: Last year, 85% of new, immigrant-owned businesses had at least one employee, compared to 78% of all the businesses in our survey. A quarter of immigrant-owned businesses said they plan to hire more employees in 2024, compared to about a fifth of all businesses.
  • Asia Is the Most Popular Continent of Origin for Immigrant Entrepreneurs: Close to a third (32%) of the immigrant founders in our survey were born in Asia, the most of any continent.
  • Immigrant and Second-Generation Founders Seek Independence and Financial Security: Flexibility, financial security, and having control over their time and path in life were the most popular motivators for immigrant and second-generation founders.

Introduction 

Immigration plays a major role in the United States’ economy. While immigrants make up 14% of the U.S. population, they own around a fifth of U.S. businesses, according to the Small Business Administration

Last year was no different, as 17% of new business owners were born outside the U.S., according to Gusto’s 2024 New Business Formation survey of 1,300 entrepreneurs who started businesses in 2023. 

The children of immigrants are also key drivers of new business creation, starting the same percentage of new firms as immigrants last year. Around one-in-three founders in 2023 was either an immigrant or the child of an immigrant.

In addition to starting new businesses at elevated rates, immigrant entrepreneurs help drive the economy by creating jobs. Last year, 85% of new, immigrant-owned businesses had at least one employee, and 25% said they plan to hire additional employees in 2024.

Nearly a Fifth of New Business Owners Are Immigrants

Many immigrants come to the U.S. for economic opportunity. It’s no surprise, then, that immigrants and their children have a strong impact on U.S. business formation. While immigrants account for 14% of the U.S. population, they made up 17% of new business owners in 2023. 

Many immigrant founders pass their entrepreneurial spirit onto their children. Last year, 17% of new business owners were children of U.S. immigrants.

Asia has become the top continent of origin for U.S. immigrants, and the same is true for immigrant entrepreneurs. Close to a third (32%) of the immigrant business owners in our survey were born in Asia. 

A significant percentage of immigrant entrepreneurs were also born in Europe (22%) and North America (20%).

Immigrant-Owned Businesses Create Jobs for Their Communities

In addition to producing valuable goods and services, immigrant and second-generation founders help their communities by creating jobs. In 2023, 85% of new, immigrant-owned businesses, and 72% of businesses owned by second-generation founders, had at least one employee. The full group of businesses in our survey was also overwhelmingly likely to have one or more employees, with more than three-fourths (78%) hiring at least one.

Businesses owned by immigrants or children of immigrants are more likely than average to have plans to hire additional employees this year. A quarter (25%) of immigrant entrepreneurs and 23% of second-generation entrepreneurs who started a business in 2023 said they expected to add employees in 2024, compared to around a fifth (21%) of all the entrepreneurs in our survey.

Those growth plans suggest new businesses owned by immigrants and children of immigrants performed better than average last year. Hiring employees requires both the financial health to add payroll and expectations of a bright future.

Immigrant Entrepreneurs Care About Independence

Immigrants have similar reasons for starting businesses as other founders. Many are motivated by the desire to have more flexibility and control over their careers, with 70% of the immigrant founders in our survey saying they started their company because they wanted more flexibility and to be their own boss, compared to 66% of all founders.

Immigrant founders cited financial motivations for starting their business at a similar rate as the full group of founders in our survey. Immigrant business owners were slightly less likely to say they wanted financial stability or to build a long-term asset (35%, compared to 36% for all business owners), and slightly more likely to say they wanted or needed to supplement their household’s income (19%, compared to 16% for all business owners).

Second-generation founders are more likely to be motivated by business opportunities or new technology. Thirty-nine percent of second-generation founders said they started their company to seize a business opportunity, compared to 28% of immigrant founders and 37% of all founders.

Like many of the new business owners we surveyed, immigrant and second-generation entrepreneurs care deeply about creating independence for themselves and their families. Immigrant entrepreneurs, second-generation entrepreneurs, and the full group of entrepreneurs we surveyed shared the same top-two priorities for their firms: growing a business that will allow them to support themselves and/or their families far into the future (68% of immigrant entrepreneurs, 79% of second-generation entrepreneurs, and 75% of all entrepreneurs) and wanting control over their time, activities, and path in life (70% of immigrant entrepreneurs, 77% of second-generation entrepreneurs, and 74% of all entrepreneurs).

Close to half of immigrant entrepreneurs said generating income (48%) and having a positive impact on their communities (48%) were priorities, while more than half of second-generation entrepreneurs cited each of those benefits as a priority.

Conclusion

The optimism, ambition, and independence that lead someone to move to a new country are also qualities that drive entrepreneurship. In 2023, immigrants and their children continued to play a significant role in business creation in the U.S. Their strong hiring track record and growth plans show how important a role businesses owned by immigrants and second-generation Americans play in their communities.

Nich Tremper Nich Tremper is an Economist at Gusto, researching entrepreneurship and the small business life cycle in the modern economy. Nich has worked in research offices in the federal government and financial service industries, studying small business outcomes and their roles in local economies. He holds a Master’s degree from the University of Minnesota, where he researched local government business expansion efforts. Nich currently lives in Winston-Salem, NC.
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