For early-stage startup founders, uncertainty is just part of the daily grind. What sets them apart is how they’re turning challenges into opportunities to rethink how businesses grow and compete.
A recent survey from Mercury, a financial technology company, asked 1,500 U.S. entrepreneurs about how they are navigating capital, technology adoption, operational costs and strategies for funding and hiring. The results reveal a community of founders who are resilient, optimistic and eager to adopt new technologies.
One of the clearest patterns to emerge is the role of AI. Rather than a luxury, AI has become a central tool for startups, helping them streamline operations, boost productivity and make smarter decisions, all while sustaining growth even in an unpredictable economy.
Mercury’s data reveals a striking trend: Despite global headwinds, the survey found that 87 percent of entrepreneurs reported their confidence in their business’s financial prospects had improved compared to 2024.
Photo-illustration by Newsweek/Canva
AI Powers Growth
This confidence appears to be intrinsically linked to their adoption of AI. Companies that have invested significantly in AI adoption had a 93 percent positive outlook about their financial prospects, versus 71 percent for non-AI adopters.
Founders using AI reported a significantly higher return on investment (ROI) compared to “traditional” alternatives, with 83 percent saying it had a somewhat or significantly higher ROI.
This ROI is not just a statistical blip; it is driving a fundamental shift in how startups allocate resources. More than half of all companies surveyed—55 percent—are actively reallocating their budgets from traditional tools to AI technologies.
This shift is even more pronounced among larger startups and more established companies, demonstrating a widespread strategic commitment to AI investment.
The funding landscape also reflects this shift toward AI. “Venture capital data shows that investment in AI-focused startups is responsible for a large and growing share of total venture capital funding, amid otherwise very challenging startup funding circumstances,” John Dearie, president of the Center for American Entrepreneurship (CAE), told Newsweek. This suggests that investors, like founders, increasingly view AI adoption not as optional but as essential to long-term growth.
“Companies of all sizes are using AI to become more productive by automating costly data and labor-intensive tasks,” Dearie said.
Hiring Gains From AI
One of the most compelling findings of the survey is the relationship between AI adoption and hiring. While common wisdom might suggest that automation leads to job losses, the opposite appears to be true in the startup ecosystem.
“Remarkably,” said Dearie, “startups using AI report that AI tools are leading to more hiring, not less.”
He continued: “This finding, of course, runs counter to the narrative that AI will eliminate jobs. But this insight is actually consistent with a major takeaway from our recent May 6th roundtable with AI-focused entrepreneurs in Houston. Participants told us that in addition to using AI to automate certain aspects of their businesses — financial analysis, record-keeping, project management, employee evaluation, more precise advertising, etc — many startups are using AI to analyze their customer relationships in order to identify additional needs and problems of their customers that startups can help address. In other words, many startups are using AI to extend and deepen their relationship with customers and clients — with clear implications for additional hiring.”
This is particularly evident in the use of contract workers. Companies with significant AI adoption were nearly four times higher in their reliance on contractors, with 45 percent of companies with significant AI adoption saying they are “very reliant” on contractors, versus 12 percent for non-adopters.
Mercury spokesperson Celeste Carswell told Newsweek these AI-forward companies “tend to deploy contractors in growth-driving roles like sales and marketing, while non-adopters lean toward operational and support functions.”
This data suggests that startups are leveraging AI to scale flexibly and globally, with 38 percent of AI adopters using contractors to access international talent, a rate more than double that of non-adopters.
AI Spreads Beyond Tech
The survey also reveals how widespread AI adoption has become. While tech companies were the most likely to be shifting their budgets toward AI (72 percent), at least 50 percent of respondents in every other industry said the same. This signals that AI investment isn’t limited to Silicon Valley, it’s a global and cross-industry trend.
Looking ahead, some industries may feel AI’s impact more than others. “In my view, healthcare — both with regard to medical research and development, and the efficiency of health care delivery — is an industry particularly ripe for AI-driven disruption and greater efficiency,” Dearie told Newsweek.
“That’s great news for lots of reasons, not the least of which is the national debt problem — Medicare and Medicaid are huge drivers of the federal budget and our national debt.”
Barriers Slow Some Founders
However, a resource gap remains. According to the data, older and larger startups are more likely to shift budgets toward AI: 62 percent of companies with 100-plus employees and 61 percent of companies aged five or more years reported reallocating resources toward AI tools. In contrast, solo founders were significantly less likely to do so, highlighting how limited runway and resources can constrain AI adoption even when interest is high.
But adopting AI is not without its hurdles. Dearie emphasized how several business owners noted how difficult it can be to keep pace with AI’s rapid evolution.
“Participants reported that AI is developing so quickly that as busy business owners, they struggle to keep up,” Dearie said. Many reported feeling “behind the curve” when it came to evaluating and incorporating new tools, while others highlighted challenges around interpreting model outputs and ensuring data security.
“Business owners know they need to be more digitally active and savvy, but need help choosing, training on, and effectively incorporating AI tools,” he added.
Policy Questions Ahead
Ultimately, the Mercury survey offers a powerful narrative of adaptation. Early-stage companies are not waiting for the economic winds to change; they are harnessing the power of new technology to forge their own path.
As Carswell concluded, “Nearly half of working Americans are employed by small businesses, making early-stage companies a critical lens into how AI adoption is impacting the economy.”
Still, the pace of adoption raises policy questions. Dearie argued that Congress should clarify how small businesses can responsibly finance digital tools like AI. He pointed to bipartisan legislation, like the Small Business Technological Advancement Act, which would explicitly allow startups to use SBA-backed loans to pay for AI tools and training.
“Entrepreneurs need clear rules of the road – most importantly, a consistent national standard with regard to data privacy and security, and a national regulatory architecture for the development and application of AI,” he said. Bad or hasty policy, he warned, could stifle innovation just as it begins to accelerate.
It is clear that the entrepreneurial landscape is in flux, and the ability to leverage tools like AI and embrace flexible strategies will be the key to success for the next generation of businesses.
“The successful incorporation of AI by entrepreneurs to grow more efficiently and to create additional jobs is a very bullish signal for the U.S. economy,” said Dearie.