New US business applications reached 5.6 million in 2025, rising 24% since the release of ChatGPT, as AI tools lower the minimum scale for launching ventures, according to Citadel Securities.
- New US business applications rose 24% post-ChatGPT launch.
- Seed-stage startup median employee count dropped from five to four.
- AI enables leaner operations by automating multiple functions.
Market signal
The US saw a 24% increase in new business applications following the debut of ChatGPT, with applications hitting 5.6 million in 2025. This surge correlates with a decline in the median number of employees at seed-stage startups, which fell from five to four in early 2023. While rising interest rates and softening hiring also influenced this decline, the accessibility and efficiency of AI tools stand out as a key driver in lowering operational barriers for new companies.
AI technologies enable founders to consolidate accounting, marketing, customer service, and compliance tasks that once required dedicated employees. By reducing the minimum efficient scale—the revenue point at which it becomes economical to hire specialists—AI has effectively lowered the threshold to start viable businesses. This dynamic may signal a broad structural shift whereby entrepreneurial activity increases even amid challenging labor market conditions.
Operator impact
AI adoption allows startups to launch and scale faster with leaner teams. An example is Medvi, a telehealth company launched with a $20,000 budget and just two employees, which reached $401 million in sales in its first year and is on track for $1.8 billion in revenue by 2026. Medvi leverages a suite of nonproprietary AI tools for coding, creative work, and customer communication while outsourcing regulated functions to specialist partners. This combination lowers fixed costs and compliance overhead, enabling rapid growth with minimal staffing.
For operators and service providers, this trend highlights growing demand for AI-driven productivity tools and specialized compliance outsourcing arrangements. Providers that can deliver integrated AI capabilities or compliance-as-a-service may find new opportunities serving a larger and more agile base of small and midsize businesses that are digitally native and growth-oriented.
What to watch next
The widening performance gap between digitally advanced SMBs and their smaller peers is expected to persist, driven by differential adoption of AI-enabled tools and multichannel digital payment acceptance. Monitoring how AI influences labor allocation across industries is crucial, as early data suggest businesses defer hiring until scale makes human judgment critical rather than eliminating jobs outright.
Industry participants should also track regulatory responses to AI-driven business models, especially regarding compliance and labor standards, which could impact the cost and speed of startup scaling. Finally, watching the evolution of AI tool ecosystems and partnership models in compliance and regulation-heavy sectors like telehealth could signal broader adoption trends and operational best practices.