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.

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.

Cliff: Artists who embrace these tools are going to create entirely new genres. Just like MIDI sparked electronic music, AI will enable new forms of expression. Studios are already using AI at various stages of production.

But what they still need — and will always need — is human emotion and the ability to interpret art for human audiences. That’s what makes creatives invaluable.

If your daughter understands that relationship — between AI and human creativity — she’ll be in a much better position to thrive in her field. Keith: That’s great advice. I’ll be turning that into a short and showing it to her. Thanks, Cliff!

Let’s bring it back to job seekers for a moment — should people still prioritize in-person networking? Is that the “secret weapon” for getting past all this technology? Cliff: Absolutely. Networking is still the most effective way to get a job.

Whether it’s meeting someone in person, on LinkedIn, or through a mutual contact — any direct connection gives you a serious edge. Just two weeks ago, someone messaged me cold on LinkedIn asking for advice about a role at Phenom. I didn’t know them, but I respected the effort.

I sent them a Zoom link, we talked for 45 minutes, and afterward, I called the hiring VP and said, “This person cares. They’re worth a closer look.” Keith: So the human touch still matters, even in an AI-driven hiring process. Cliff: Yes.

And here’s the truth: a lot of younger professionals missed out on learning how to network because of COVID. We kept them isolated behind screens for years, and now they’re struggling with face-to-face interaction. If you’re job hunting, don’t just rely on online applications. Go find events — any event.

Charity fundraisers, trade shows, local meetups. Talk to people working at the company. Ask, “What’s it like to work here?” That curiosity will open doors.

(TNS) — City leaders are eyeing the next generation of cutting-edge technology to help grade and improve the condition of St. Joseph’s streets and roadways.

St. Joseph Public Works and Transportation is in the process of integrating new AI-powered software called Road AI, a type of specialized road maintenance software capable of detecting defects from cracking and fretting to edge deterioration and larger potholes.

“We’re trying to advance everything in Public Works and AI is the big thing right now, St. Joseph Public Works and Transportation Director Abe Forney said. “This new technology will enhance the ability for our public works department to hit those potholes.”

A $15,380 contract for the new technology is set to be introduced for first reading at Tuesday’s City Council meeting and could be finalized later on Sept. 15.

The program operates by recording street surfaces using smartphones while an inspector drives the route. The video is uploaded nightly to a cloud-based AI program with condition ratings being available within hours.

Data is then exported to Excel and imported into Cartegraph — an operations and asset management software platform — for use in determining overlay lists, concrete repair lists and other maintenance priorities.

“It’ll also give us sign inventory that we’ve never had. So it’s looking at signs. It’s looking at our road conditions. It’s looking at crosswalks where they should be and bike trails that cross the road,” Forney said. “This technology is going to continue to grow.”

RoadAI’s technology will sharply boost efficiency and enhance the long-held process of having a supervisor drive and document 440 lane miles of roadway in St. Joseph.

If approved by council, Forney expects the city will be able to quickly integrate the new software and have it deployed for staff usage in short order. The software is part of a subscription service offered through company Vaisala Inc.

“Taking one of our employees and driving all the roads and him writing on a piece of paper what our road conditions are … this is going to be much better,” Forney said. “This technology is going to free them up to do other things that need attention.”

In the long run, he’s optimistic the AI-powered technology will provide cost savings for the department and could grow in usage in other areas. RoadAI’s website states the software is 50% less expensive that traditional road surveys.

The technology is one key part of the city’s new five-year street master plan, a strategy designed to address top concerns identified in a community survey launched earlier this year.

“The survey that just came out said that our road conditions are in poor shape. We all know that some of our roads need some attention,” Forney said. “There’s so many things that are out there that we can utilize to better our public works department.

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