Houston’s pandemic-era startup boom has eased from its 2021 high, even as national entrepreneurship sets fresh records, according to a new analysis that tracks business formation trends. A Kaplan Group study, drawing on U.S. Census Bureau Business Formation Statistics and American Bankruptcy Institute data, shows the Houston metro’s new-business application totals have stepped down from a 2021 peak but remain well above pre-COVID baselines.
Key takeaways
- Applications peaked in 2021 at 151,804, then fell to 130,011 in 2022, rebounded to 145,926 in 2023, and eased again to 138,595 in 2024. Despite the slippage, 2024 still sat ~60%–90% above the 2015–2019 average, underscoring elevated post-pandemic entrepreneurial activity.
- Nationally, new business formations have surged ~435% since 2004 (from ~89,561 per month to ~478,805 per month in 2025), while business bankruptcies have dropped ~74% since 2004—signs of resilience even amid tighter credit and higher rates.
Houston’s trajectory in context
The arc is clear: an extraordinary spike in 2021, cooling in 2022, a partial bounce in 2023, and a gentler comedown in 2024. That pattern broadly lines up with higher borrowing costs and tighter funding conditions that have tempered risk appetite across U.S. metros, even as underlying entrepreneurial interest stays elevated. In Texas, Dallas–Fort Worth followed a similar slide (162,312 in 2021 vs. 153,378 in 2024), while San Antonio logged slightly higher application volumes in 2023–2024 than its 2021 peak. Austin bucked the trend with 2023–2024 levels exceeding 2021, reflecting its distinct founder and capital mix.
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What the numbers suggest
- The boom has normalized, not vanished. Houston’s 2024 tally, though below the 2021 apex, remains well north of pre-pandemic norms, indicating a new, higher baseline for business formation.
- Local sectoral breadth matters. Energy still anchors Houston, but health care, aerospace/space tech, and digital services continue to seed new-company formation—supporting the elevated baseline even as rate-sensitive ideas slow. (Trend context per regional reporting and the study’s state-level comparisons.)
- National headwinds ≠ local retreat. The Kaplan analysis pairs the formation surge with a long-run decline in bankruptcies, implying improved survivability conditions nationally—even if capital has become costlier.
Texas vs. the nation
The Kaplan Group frames 2025 as a national high-water mark for entrepreneurship on a monthly average basis, with Texas among the most active states by formations per month (alongside Florida, California, New York, and Georgia). Houston’s cooling therefore reflects local normalization inside a still-hot national backdrop—a nuance important for founders weighing market timing against financing costs.
Methodology and limitations
- Sources: U.S. Census Bureau Business Formation Statistics (BFS) and American Bankruptcy Institute (ABI) bankruptcy filings, aggregated and analyzed by The Kaplan Group.
- Scope: Applications indicate intent to start a business (EIN filings), not operational openings or survival rates; 2025 figures in the Kaplan work use partial-year projections. City/metro breakouts cited for Houston come via InnovationMap’s coverage of the Kaplan dataset.
Outlook
If rates drift lower and credit conditions ease, application counts could stabilize or edge up from 2024 levels. But even without cheaper money, Houston’s diversified economy suggests today’s formation pace—materially higher than the 2015–2019 average—can hold, provided operating costs don’t re-accelerate. The data shows a cool-down from a peak, not a reversal to pre-pandemic lethargy.
By the numbers (Houston metro):
• 2021: 151,804 applications (peak)
• 2022: 130,011
• 2023: 145,926
• 2024: 138,595
• 2015–2019 average comparison: 2024 total is ~60%–90% higher than the pre-pandemic average.
Sources: InnovationMap summary of metro-level figures from The Kaplan Group’s analysis (Sep. 3, 2025). National and methodological context from The Kaplan Group (Aug. 6, 2025) using Census BFS and ABI bankruptcy data. InnovationMap The Kaplan Group
