Skip to main content

Houston Saw Spike in New Business Applications in ’20

Published Jan 26, 2022 by Ernesto Becerra

Downtown Houston saw new businesses emerge in 2020 despite the pandemic crisis.

Despite the economic downturn during the early stages of the pandemic, Houston entrepreneurs saw a window of opportunity to launch something new. 

A report from LendingTree ranks the Houston metro area No. 1 in new-business applications in Texas during 2020. With a 37.4% increase in new-business applications from 2019 to 2020, Houston not only outranks Austin and Dallas but takes 20th place among the nation’s 100 largest metros.

The Greater Houston area racked up 118,183 new-business applications in 2020, up from just 85,998 new-business applications in 2019, according to the U.S. Census Bureau.

“The pandemic has created so much financial chaos for so many people, and that uncertainty surely spurred many Americans to take the plunge,” said Matt Schulz, Chief Credit Analyst at LendingTree. “Some folks did it out of necessity because of income or job losses. Some folks did it to feel more secure, as the idea of relying on one source of income just didn’t make sense anymore for a lot of people. Others likely did it because they’d wanted to for years but never felt the time was right.”

While not everyone who filed an application would move forward to form a business, the increase indicates that a growing number of Houstonians were looking to start one in 2020. 

Nationally, despite COVID-19 directives and stay-at-home restrictions, the retail trade sector  experienced the biggest growth among major industries at 59.7%.

“So many companies have made it so easy to sell online that people feel good about taking the plunge,” Schulz explained. “Setting up an online store is generally simpler, quicker and less expensive than ever, so the barriers to entry that once scared potential entrepreneurs away from opening a new store aren’t the obstacles that they once were.”

Two other sectors did not fare as well. Mining and real estate were the only industries to experience a decline in new applications between 2019 and 2020. Both sectors had trouble adjusting to the restrictions that came with the pandemic. 

Though metro data isn’t yet available for 2021, the Census Bureau says business applications continued to climb nationwide last year, up by 600,000 compared with 2020 totals. The Bureau also forecasts a 0.3% increase in business formations, or roughly 30,000 new businesses in 2022. 
 
View the full list below:

 

Learn more about Houston’s Economy and what makes the region a great place for business

Related News

Economic Development

Texas Leads Nation, Houston Leads Texas in Fortune 500 Companies

5/24/22
For the first time in more than a decade, Texas is home to the most Fortune 500 companies in the nation, and Houston is now home to the largest concentration of Fortune 500s in the Lone Star State thanks to several recent headquarters relocations.  The 2022 Fortune 500 list ranks the largest corporations in the U.S. by revenue for the 2021 fiscal year. Twenty-four companies on this year’s list are headquartered in metro Houston, with 21 of those based within the city limits. Statewide, 53 companies made this year’s list.  The 2022 list marks the first time that two Fortune 500 firms, NRG Energy and Hewlett Packard Enterprise (HPE), were counted in Houston's column. NRG announced in May 2021 that it would relocate its headquarters from Princeton, NJ to Houston. HPE completed its headquarters move from San Jose, Calif. to the Spring area earlier this year.  ExxonMobil, which ranks No. 6 on the Fortune 500 list, announced earlier this year that it would move its corporate headquarters from the Dallas area to Houston. That move is not expected to be complete until 2023 and the company remains in the Dallas count in this year’s list.  Among states with the largest concentration of Fortune 500 companies, New York fell to No. 2 on this year’s list with 51 companies after seven years at the top. California was No. 3 with 50 companies.  A total of 97 Texas companies made the expanded Fortune 1000 list this year. Forty-three of those based in the Houston area.  Below are the Houston-area Fortune 500 firms and their respective rankings.  No. 29 Phillips 66 No. 70 Sysco Corp. No. 77 ConocoPhillips No. 88 Plains GP Holdings No. 89 Enterprise Products Partners No. 123 Hewlett Packard Enterprise No. 133 NRG Energy No. 135 Occidental Petroleum Corp. No. 170 Baker Hughes No. 193 EOG Resources No. 203 Waste Management No. 216 Targa Resources No. 223 Kinder Morgan No. 233 Cheniere Energy No. 241 Halliburton Co. No. 273 Group 1 Automotive No. 285 Quanta Services No. 320 Westlake No. 410 Huntsman No. 414 CenterPoint Energy No. 431 APA No. 460 KBR No. 481 Academy Sports and Outdoors  No. 486 Southwestern Energy See the full Fortune 500 list. 
Read More
Digital Technology

New Generation of Startups Aim to Fuel Resurgence of Advanced Manufacturing in Houston

5/13/22
An autonomous rover dubbed the “layout Roomba” that marks architectural and engineering designs directly onto unfinished concrete floors is one of many examples of the innovation happening in Houston’s advanced manufacturing sector. The city boasts a thriving tech ecosystem and is considered a global manufacturing powerhouse due to its central geographic location, unparalleled infrastructure and talented workforce.  Funding is now flowing into Houston to help drive the next wave of manufacturing innovation. According to the Partnership’s 2022 Houston Tech Report, more than 900 investors have funded over 1,500 venture capital transactions in the Houston region over the last five years. Data shows that 8.6% of all VC deals are funding manufacturing projects with another 8.7% funding AI and machine learning ventures.  “I think Houston is a great place to start a company. It hosts a diverse pool of exceptional talent, a reasonable cost of living and a welcoming start-up community,” said Derrick Morse, CEO and founder of Rugged Robotics. “Houston is also home to a number of innovative companies that solve really hard and really important problems.”  Rugged Robotics, a Houston startup company founded in 2018, hopes to revolutionize the construction industry by tackling the challenge of field layout by using its small robot to create a more detailed, more accurate and faster way of doing the work. Traditionally, a construction worker must do the marking manually using tape measures, chalk lines and surveying equipment. Morse, a construction industry veteran, said he saw a need to solve a pain point in the construction industry. “By focusing on the problem, and by developing a practical solution, we’ve unlocked a very exciting opportunity” Morse said. Rugged Robotics is operating out of the East End Maker Hub, a makerspace and manufacturing center in Houston’s East End. Morse said it was a no-brainer to choose the incubator as they started growing. “The East End Maker Hub was initially attractive for two reasons,” Morse said.  “First, access to the machine tools and rapid prototyping equipment we were familiar with at TXRX, and second, flexibility.” He added that the flexibility of the leases allows the company to move into bigger spaces as they evolve. Next month will mark a year since the $38 million innovation hub opened. Urban Partnerships Community Development Corporation says the facility is 95% occupied with 49 tenants from candle making to biotech/manufacturing, a sign of a successful first year. The East End Maker Hub aims to create 1,000 new companies over the next five years to boost Houston’s advanced manufacturing jobs. Houston has one of the largest manufacturing workforces in the country with more than 213,100 workers, but it declined by 8.6% between 2015 and 2020, according to the Partnership’s analysis. “We've retained or created over 330 jobs thus far and aim for 500 in the coming years. We're a model for how to use public funding to jump start development to support the entrepreneurial ecosystem,” said Natasha Azizi, Executive Director of UP CDC and East End Maker Hub. The East End Maker Hub is part of several landmark projects to position Houston as a national leader in tech innovation.  According to the Houston Tech Report, venture capital investments have grown  from $423 million in 2017 to $2.02 billion in 2021, a near five-fold increase and an unprecedented 47.4% growth rate per year. Click to expand Rugged Robotics team Rugged Robotics recently raised $9.4 million in Series A funding to help the company hire more people, expand its products and more. “We’ve built an amazing foundation, and I’m excited by the road ahead.  Our team is truly inspiring.  I can’t wait to see what we’re capable of,” Morse said. Learn more about Houston's advanced manufacturing sector and innovation ecosystem.   
Read More

Related Events

Demography

Diversity, Equity & Inclusion Council

Houston is America's diverse city - this Council explores how Houston's business community plays a critical role in advancing Houston as America's most inclusive and open city, one that truly offers an opportunity…

Learn More
Learn More