New businesses created during and after the pandemic topped five million in the U.S. last year, with emerging technology leading to self-employment at higher rates than in past years.

A recent report from software company Gusto highlights as much and suggests five million new businesses were created in the U.S. in 2022 — up 42 per cent compared with pre-pandemic levels.

Additionally, the share of Black entrepreneurs tripled from three per cent in 2019 to nine per cent in 2022. That said, the report suggests a decline of five per cent at the beginning of 2023, according to Fast Company.

“There’s been this trend of people who previously had been left out of new business ownership driving this surge in entrepreneurship that we’re seeing today,” Luke Pardue, an economist at Gusto, who authored the study, said, according to Fast Company. “Everybody comes to entrepreneurship with their perspective, their idea of what problems to solve, and as we widen the net of the types of people who become entrepreneurs, the problems they identify and solve through entrepreneurship widen as well.”

The study suggests that inflation and economic uncertainty have been drivers toward entrepreneurship as a career path for Black business owners and other groups.

Forty-one per cent cite financial security or supplemental income as their key incentive, up from 24 per cent last year. This figure climbs to 56 per cent among people who run businesses alongside a traditional 9-5 job.

Other reasons cited include career burnout and a shift in lifestyle priorities, given the conditions presented by the pandemic.

The Gusto report also suggests that half of entrepreneurs quit their full-time jobs to start a business, up from 36 per cent in 2021. Nearly 63 per cent of newly self-employed respondents did so in search of greater flexibility, while almost half of the entrepreneurs aged 35 to 54 launched a firm as a result of job burnout.

“The layoffs, the disruptions to schooling, the rising cost of living as inflation entered the conversation; the groups that are driving entrepreneurship are the ones that felt these disruptions to the greatest degree,” Pardue said in the study. “In 2020, Black and Hispanic workers and women were laid off at the highest rates, and they were the ones that turned that obstacle into opportunity by starting their own businesses.”

Still, for Black and Latinx founders to scale, funding is required. But barriers to access capital remain a significant hurdle for business owners of colour. The study suggests that outside investment was secured by 10 per cent of white firm owners versus four per cent of Black and Latinx entrepreneurs.

“A lot of the gaps in financing that are critical to growing and sustaining a business are still not available to many of the groups that are driving this surge in entrepreneurship,” Pardue said in the study. “If we’re going to have equitable growth, we’re going to have to narrow those gaps.”