Kauffman Foundation Startup Report: Solo Entrepreneurs Reshape the US Business Landscape

Kauffman Foundation Startup Report research continues to highlight the changing nature of entrepreneurship in the United States, including the importance of solo ventures, microbusinesses and early-stage businesses that begin without large teams or substantial outside investment.

The Ewing Marion Kauffman Foundation’s entrepreneurship research has historically tracked a broad range of new businesses, from solo ventures to companies that go on to employ workers. Its Early-Stage Entrepreneurship data is designed to capture different types of entrepreneurial activity rather than focusing exclusively on venture-backed startups.

That broader definition is important because the American startup landscape increasingly includes businesses that look very different from the traditional technology startup model.

Solo Entrepreneurship Is Becoming More Visible

The traditional image of a startup often involves multiple founders, employees, venture capital and an ambitious plan to scale rapidly.

Solo entrepreneurs operate differently.

A single founder may build an online consulting company, e-commerce business, digital agency, professional service, creator-led brand or software product without immediately hiring a large workforce.

Digital tools have made it easier for individuals to handle functions that previously required multiple employees or outside providers.

Website builders, online marketplaces, payment platforms, cloud software, AI tools and social-media distribution can allow one person to operate a business with relatively low overhead.

Kauffman research has previously identified the presence of many microbusinesses and solo entrepreneurs within the broader entrepreneurial population.

What the Kauffman Research Tells Us

Kauffman’s entrepreneurship indicators are particularly useful because they do not define entrepreneurship only through high-growth startups.

The foundation has explained that its early-stage measures capture businesses ranging from solo ventures to businesses that employ other people, as well as ventures created from both opportunity and necessity.

This provides a wider view of American entrepreneurship.

A person starting an online service business from home can therefore be part of the entrepreneurial economy even if the company never raises venture capital or becomes a large employer.

That distinction matters when interpreting startup-formation data.

Services Remain an Important Path Into Entrepreneurship

Service businesses are particularly accessible to solo founders because they can often be launched without major physical infrastructure.

Examples include:

• Consulting
• Marketing services
• Freelancing
• Design
• Software development
• Coaching
• Professional services
• Online education
• Content production

A founder can often begin by selling expertise rather than developing an expensive physical product.

This can reduce the initial capital requirement and allow entrepreneurs to test demand before expanding.

E-Commerce Lowers the Barrier to Starting a Business

E-commerce has also created another pathway for individual entrepreneurs.

Online marketplaces and direct-to-consumer platforms allow small operators to reach customers outside their immediate geographic area.

A solo founder can potentially manage product sourcing, marketing, customer communication and fulfillment with the help of third-party technology and logistics providers.

The result is an entrepreneurial model where a business can begin with one person and scale gradually as demand develops.

Technology Is Changing What One Person Can Do

One of the biggest changes affecting solo entrepreneurship is the availability of digital infrastructure.

A small business owner can now access tools for:

• Accounting and invoicing
• Customer relationship management
• Digital advertising
• Website development
• E-commerce
• Payments
• Email marketing
• Customer support
• Data analysis
• Artificial intelligence

AI is adding another layer to this transformation.

Generative AI tools can assist with research, writing, coding, design, customer-service workflows and other repetitive tasks. This does not eliminate the need for skilled entrepreneurs, but it can allow a small operation to handle a wider range of activities.

Solo Does Not Always Mean Small

One important distinction is that a solo business at launch does not necessarily remain a one-person company.

Many entrepreneurs start alone and later hire employees, contractors or specialized service providers.

Kauffman’s research emphasizes the diversity of the entrepreneurial population, rather than treating all new businesses as identical.

A business can therefore move through several stages:

Solo founder → microbusiness → small team → growing company

This makes solo entrepreneurship an important potential entry point into the wider business ecosystem.

The Changing Meaning of a Startup

The rise of solo ventures also challenges the traditional definition of a startup.

A venture-backed technology company aiming for rapid global expansion is one type of startup.

A profitable one-person digital agency is another.

An independent online retailer is another.

A consultant building a specialized professional-services firm is another.

All can represent entrepreneurial activity, even though their goals, financing requirements and growth strategies may be completely different.

This broader entrepreneurial landscape is one reason startup-formation statistics need to be interpreted carefully.

Why Solo Businesses Matter to the US Economy

Solo entrepreneurs can contribute to the economy even without becoming large employers.

They generate income, purchase software and professional services, pay taxes and participate in local and online commercial ecosystems.

Some eventually create jobs as their businesses grow.

Others deliberately remain small because their objective is financial independence, flexibility or specialized expertise rather than maximum scale.

The Kauffman Foundation has long emphasized the importance of understanding entrepreneurship across different business types and stages rather than focusing exclusively on high-growth companies.

Challenges Facing Solo Entrepreneurs

Operating alone also creates significant challenges.

A solo founder may be responsible for sales, operations, marketing, finance, customer service and product development at the same time.

Access to capital can be another obstacle. Kauffman materials have highlighted how micro-entrepreneurs and solo-preneurs can face difficulties obtaining financing through traditional channels.

This can limit how quickly a promising business can expand.

The absence of a team can also create operational and emotional pressure. Kauffman has previously examined the isolation experienced by solo operators and the importance of entrepreneurial communities and support networks.

What This Means for the Future of Entrepreneurship

The growth of solo entrepreneurship suggests that the future of American business may become increasingly diverse.

Some entrepreneurs will continue pursuing venture-backed companies designed for rapid expansion.

Others may build sustainable businesses with one founder, a small number of contractors and a global customer base.

Technology makes both models increasingly possible.

For policymakers, lenders and entrepreneurial-support organizations, this means that measuring and supporting entrepreneurship requires looking beyond traditional startup metrics.

Business formation, survival, access to capital and the ability to transition from a solo operation into a growing company can all provide important insights.

The Bigger Startup Trend

The Kauffman Foundation’s research provides a useful reminder that America’s entrepreneurial economy is much broader than the venture-capital ecosystem.

Solo entrepreneurs, microbusinesses and small firms represent an important part of that landscape.

As digital commerce, remote work, automation and AI continue to reduce some of the costs associated with starting a business, individuals may have more opportunities to test ideas independently before deciding whether to build larger companies.

The result could be an increasingly flexible startup economy in which entrepreneurship is not defined by company size, funding round or employee count, but by the ability of individuals to identify opportunities and turn them into sustainable businesses.

Frequently Asked Questions

What is the Kauffman Foundation Startup Report?

The term refers broadly to research and reporting from the Ewing Marion Kauffman Foundation on entrepreneurship, business formation and the U.S. startup ecosystem. Its Kauffman Indicators of Entrepreneurship track early-stage entrepreneurial activity across different types of businesses.

What is a solo entrepreneur?

A solo entrepreneur is an individual who starts and operates a business without business partners or a traditional employee team. The business may rely on contractors, freelancers or digital tools while remaining founder-led.

Are solo businesses included in Kauffman entrepreneurship data?

Yes. Kauffman has stated that its early-stage entrepreneurship measures capture different types of businesses, including solo ventures and businesses that employ workers.

Why are more people able to start businesses alone?

Digital commerce, cloud software, online payments, social media, marketplaces and AI tools have reduced the infrastructure and administrative barriers that once required larger teams.

Are solo entrepreneurs the same as startups?

Not necessarily. Some solo businesses are high-growth startups in their early stages, while others are deliberately designed to remain small and profitable. The term entrepreneur covers both models.

What challenges do solo entrepreneurs face?

Common challenges include access to financing, workload, customer acquisition, financial management and the lack of a support team. Kauffman research has also examined the isolation that can accompany running a business alone.