The pandemic created an unexpected legacy: an entrepreneurial boom that reshaped the U.S. economy. Entrepreneurs like Hector Xu, who founded Rotor Technologies, emerged during this time of upheaval, driven by the desire to bring real-world change. His story is one of many that highlight how pandemic-era startups are now maturing, despite navigating numerous challenges, including supply chain disruptions, inflation, labor shortages, and rising interest rates.
Xu’s company, Rotor Technologies, which began with the idea of converting helicopters into remotely piloted drones, now employs nearly 40 people and generates $1 million in annual revenue. It’s not alone in its success. According to the U.S. Census Bureau, businesses formed between 2020 and 2022 created 7.4 million jobs by the end of 2022, a key contributor to the U.S. labor market’s recovery. Despite concerns that many of these businesses would fail or merely serve as temporary solutions during the pandemic’s peak, the evidence suggests otherwise.
This entrepreneurial surge has not only added jobs but also sparked optimism among economists. Historically, new businesses have been critical to job growth, innovation, and productivity. Their impact goes beyond just filling gaps; they introduce fresh ideas that can make industries more adaptable and efficient. Economists see startups as experimenters and innovators that are vital to navigating new challenges and evolving markets.
The pandemic offered would-be entrepreneurs the time and resources to pursue long-delayed dreams. From tech companies to tutoring services, these startups seized on the opportunities created by shifting consumer behavior, remote work, and supply chain needs. However, the long-term resilience of these businesses has been a pleasant surprise. New data reveals that startups formed during the pandemic are growing at comparable—if not faster—rates than their pre-pandemic counterparts. Even with higher interest rates, which have made borrowing more difficult, these businesses are holding strong.
Entrepreneurial activity, while slightly cooled by rising rates, remains above pre-pandemic levels, suggesting that the U.S. may be emerging from a decades-long slump in business formation. As startup founders adapt to financial pressures, the strongest businesses will likely continue to grow, bringing lasting benefits to the economy.