Women Are Behind Nearly 1 in 2 New Businesses—Here’s What’s Driving the Shift

Introduction

Five years ago, a renaissance in entrepreneurship began across the U.S., and it shows no signs of slowing. In early 2025, new business applications, a leading indicator of business creation, were more than 40% greater than at any point since before the Great Recession.

Women have been a driving force behind this boom. In 2019, they launched nearly 29% of new businesses. By 2024, women started almost half of new businesses according to Gusto’s 2025 New Business Formation report.

Women are not just participating in the entrepreneurial wave – they are reshaping it. To understand the future of entrepreneurship in the U.S., we must understand the goals, needs, and challenges of women business owners.

Key findings

• The share of new women owned businesses increased by 69% since 2019. Women launched 49% of all new businesses last year, up from just 29% in 2019. This marks the highest share recorded since Gusto began publishing its New Business Formation report.
• Black, AAPI, and younger women are driving entrepreneurship. In 2024, AAPI- and Black-owned businesses were more likely to be started by women than men, while Millennial and Gen Z women drove most of the gains among younger entrepreneurs. These shifts point to a lasting change in who is leading business creation in the U.S.
• Women business owners take a strategic, deliberate approach to hiring. New women entrepreneurs were less likely than men to hire former colleagues or friends and more likely to rely on professional networks or gradually convert contractors to employees. 
• Debt and personal networks, not equity, power women’s business financing. Women were more likely to use personal loans or financing from family and friends to start their businesses. Fewer women secured SBA loans or private equity, increasing their personal financial exposure compared to their male counterparts.

Nearly half of all new businesses in 2024 were started by women

Women entrepreneurship has grown rapidly. In 2019, women started nearly 29% of new businesses. By 2024, that share increased by 69% meaning that women started close to half (49%) of new businesses, the highest share we have recorded since this report began. 

AAPI, Black, and younger women drive entrepreneurship

Black, AAPI, and younger generation women are playing a central role in reshaping entrepreneurship today.

In 2024, AAPI- and Black-owned businesses were more likely to be started by women than by men, while White-owned businesses showed near parity between women and men. Hispanic-owned businesses were an exception: 56% were started by men. Much of this reflects the industries where new businesses are concentrated. Women were more likely to start businesses in community services (68%) and personal assistance sectors (58%). These include businesses such as healthcare, social assistance, and retail. However, Hispanic-owned businesses were concentrated in the goods-producing sector (e.g., home remodeling, construction), with nearly 40% of all Hispanic-owned businesses started in this sector, and overall, men  started nearly 70% of businesses in this sector in 2024.

Age trends show a similar shift. More than half of businesses started by Millennials and Gen Z entrepreneurs in 2024 were started by women, compared to near parity among Gen X founders and a substantial male majority among Baby Boomers.

People tend to start businesses in their 30s and early 40s, after building experience and skills in the workforce. Millennial women, the youngest of whom turned 28 in 2024, have higher labor force participation and educational attainment than women of earlier generations and early indicators show that Gen Z women are following the same path. These gains in education and workforce experience are helping drive more women into entrepreneurship today.

Women start businesses for career autonomy

For many women entrepreneurs, flexibility and autonomy are the driving motivations for starting a business.

Nearly three-fourths of women who launched businesses in 2024 said they wanted to work according to their own schedules, and 62% said they wanted to be their own boss. Among all entrepreneurs who cited flexibility as a top reason for starting their business, nearly two-thirds were women.

Women were also more likely than men to prioritize personal and community goals. Nearly two-thirds women founders cited schedule flexibility among their reasons for starting a business, compared to 49% of men.

Financial goals remain important, but they are not the sole driver. More than half of new women entrepreneurs plan to build a financial asset with their business, and nearly one-third expect to increase their income. Flexibility, autonomy, and financial security together continue to fuel women’s growing presence in entrepreneurship.

Women are more likely to finance their new business with debt and personal networks

Women business owners are more likely to finance their new businesses with personal networks or debt rather than equity.

Nearly two-thirds of new small business owners who sought financing from friends and family in 2024 were women. Women also made up 55% of business owners who secured private loans, which are often backed by personal collateral like a home or car.

By contrast, fewer women used financing options that carry stronger protections. For example, Small Business Administration (SBA) loans allow up to 85% of a loan’s value to be guaranteed by the federal government, helping protect owners from risking personal assets. However, 58% of new businesses that secured SBA loans in 2024 were owned by men, compared to just 42% by women. 

Women were also less likely to use private capital investment, where investors, not owners, carry the financial risk. Nearly 70% of businesses that used private capital investment were owned by men, compared to just 30% by women. After restricting to only businesses that sought private investment, women were 75% less likely than men to receive equity financing.

This gap matters. Entrepreneurship is inherently risky, and financing that protects personal assets can make it easier for business owners to take risks. The lower use of SBA loans among women means they may be more exposed to personal financial risk if their business struggles.

Over half of women who use financing do so to cover short-term costs

Hiring was a major hurdle for new women entrepreneurs in 2024. More than half (54%) reported difficulty finding or retaining employees, even as they were less likely than men to list business growth and customer support as top operational challenges.

Part of this gap may reflect different hiring strategies. Women were less likely to hire former colleagues or friends than men (31% compared to 43%), and more likely to rely on professional networks (22% compared to 14%) or to convert contractors into W-2 employees (11% compared to 6%). Hiring from personal networks is risky, but not uncommon among many small businesses. By focusing more on professional connections and gradual hiring models, women entrepreneurs may have taken a more deliberate approach to building their teams.

Women were also more likely to leverage emerging technologies to manage operations. While less than half of women cited marketing or customer acquisition as major challenges, many used generative AI tools to support customer service. Among women business owners who used AI, nearly 42% applied it to customer support roles, compared to only 23% of men. Women entrepreneurs were 85% more likely than men to use AI in these ways, allowing them to focus on delivering services and growing their businesses even while managing leaner teams.

Conclusion

Women are reshaping entrepreneurship at a historic pace. Their growing share of new business creation signals important shifts not just in who becomes an entrepreneur, but in what new businesses may need to thrive.

First, expanding access to capital could make a significant difference. Women are more likely to rely on debt or personal networks to finance their businesses, and less likely to access equity investment or SBA-backed loans that offer stronger protections. This pattern can expose women entrepreneurs to greater personal financial risk if their businesses face challenges. Financial institutions, investors, and policymakers may have an opportunity to develop programs that help women secure funding with less personal exposure.

Second, workforce strategies are evolving. New women business owners often take a deliberate approach to hiring, relying on professional networks and gradually building their teams. They are also more likely to use emerging technologies like generative AI to manage customer relationships and operations. Tailoring support services, hiring pipelines, and technology resources to reflect these shifts could help strengthen small business growth across the economy.

Finally, understanding the motivations behind entrepreneurship will be key. Flexibility, autonomy, and community impact are major drivers for many women entrepreneurs, alongside financial goals. Programs that recognize and support a broader set of success measures may be better positioned to meet the needs of today’s business owners and help sustain their long-term growth.