Gen Z Files 66% More Business Applications as AI Compresses Startup Costs

Business applications filed by members of Generation Z jumped 66% in June from a year earlier, far outpacing every other age group, according to Bank of America Institute research published in August.

The Gen Z surge anchors a broader boom in U.S. entrepreneurship. Americans filed more than 531,000 business applications in June, more than double the 2020 figure, Federal Reserve Bank of St. Louis data show. Gen Z members are contributing "disproportionately" to that wave, the institute found.

What is driving the surge?

Artificial intelligence tools have cut the cost of launching a company, compressing tasks that once required hired engineers. "The barriers to entry are getting much lower," Lori Rosenkopf, a professor at the Wharton School at the University of Pennsylvania, said. "It's pretty easy for anyone to start building some content, making themselves a content creator or doing a little bit of vibe coding."

Angela Lee, co-director of the Eugene Lang Entrepreneurship Center at Columbia Business School and a serial entrepreneur, said she paid roughly $15,000 for a single web developer when she started her first company. "Now with AI, something that would have taken an app developer three months and $15,000, you can vibe code over the weekend," she said.

The labor market is reinforcing that pull. A ZipRecruiter survey of 1,000 recruiters found that 38% of employers have shifted basic data-processing tasks away from entry-level workers and onto AI.

"There is a lot of job dislocation right now, and younger people are finding it hard to secure traditional employment given our current economic conditions," Rosenkopf said.

Who is filing?

Lower-income households now account for 25% of all new businesses getting off the ground, up from 20% in 2020, the Bank of America Institute found. That reverses a long-running pattern in which founders skewed toward higher-income families.

"In a lot of ways, I think entrepreneurship is democratizing right now," Lee said. "So I'm not at all surprised to see younger, lower-income founders start companies."

Scott Issen, CEO of the nonprofit Future Founders, said demand for his group's programs is climbing. He links the change to generational attitudes about work.

"Macroeconomically, I think there's less interest year over year for young people to work for others," Issen said. "They would prefer to be their own bosses and create their own opportunity."

How is one Gen Z founder using AI?

Melanie Herbert, 23, founded Sync Labs as an undergraduate at the University of Pennsylvania. The San Francisco-based company applies generative AI to long-term care for older Americans — summarizing clinical notes, lab results and staff observations and producing clinically backed care recommendations. The platform can "ambiently listen" to staff meetings on request and convert them into structured output, Herbert said.

Herbert, who spent years in hospitals as a patient for a serious medical condition, said the sector is overlooked by technology vendors. "I feel like it's unfortunately a very neglected space where a lot of the technology and tools are really behind," she said.

AI is integral to both the product and the back office. Herbert called the technology a "game changer" for a small team. "As a startup, time is everything," she said. "We're trying to get our product out to as many people as possible as quickly as possible."

She pushed back on the idea that job-market anxiety drove her into entrepreneurship. The strain, she noted, sits with her peers. "Being in this generation, it's probably one of the most talked about things," she said.

What does the data suggest next?

Whether the 66% jump in Gen Z filings — more than 531,000 nationwide in June, double the 2020 pace — converts into durable employers or a higher-than-average closure rate will hinge on capital access for lower-income founders and on AI's continuing ability to replace entry-level labor before competitors can hire.