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ZDNET’s key takeaways

• Larger tech companies are retrenching their hiring. 
• Funding for AI startups is rising.
• More graduates are calling themselves founders.

Launching a startup or small company can be a calculated gamble, but the innovation pouring out of this sector is astounding. Evidence suggests there are more opportunities for tech professionals at startups or for people launching their own companies, especially as hiring at larger tech firms flattens. However, research also suggests these fresh opportunities depend on multiple, complex factors. 

When it comes to innovation, consider the latest innovation from Midjourney, a business launched on a community model with no investors or venture capital funding, which is disrupting the medical imaging space. The company, which at last report had 184 employees, recently announced it has built a low-cost method based on sound-based imaging rather than radiation or magnets. 

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Such examples highlight this is a good time for smaller tech innovators, with a range of opportunities for IT professionals.

Growth in smaller ventures

Nearly 50% of 2025 VC funding targeted AI-related startups, according to a report from Ventureburn AI. Funding for AI startups reached $202 billion globally in 2025, up 75% year over year, the study found. There was even sizable growth in AI-focused startups, growing from 245 to 308 during the year.

The opportunities are such that many tech professionals are even thinking about micro-sized opportunities. The most recent US Census data reported that there are 29.8 million solopreneurs (one- or two-person businesses), and applications to start new businesses keep coming in. More than four million solopreneurs are in the professional, technical services, and scientific space. Another 400,000 are in the information sector. 

The US Small Business Administration estimated that about 81% of businesses, or more than 28 million firms, have no employees. In contrast, there are about 20,000 large businesses across the country. The survey reported 16% of businesses established in 2022 (the most recent data available) were startups compared with 13% in 2019.

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This growth in smaller ventures is due to these companies and the startup sector offering an alternative to the tough job market for entry-level tech jobseekers, a study from SignalFire found. “Starting a company is the new entry-level job,” the study’s authors asserted.

Hiring patterns among ‘tech majors’

The SignalFire study looked at hiring patterns among the “tech majors” (Alphabet, Meta, Apple, Amazon, Microsoft, Netflix, Nvidia, Tesla, Uber, Airbnb, Block, and Stripe), which reflected stalled hiring, running at 25% below the 2019 baseline, and now the lowest level since the huge 2023 crash. Software engineers accounted for 55% of all hiring, up from 46% in 2019. 

New grad or entry-level hiring had collapsed further, down roughly 65% at the tech majors.

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So, what’s behind the flattening in demand for tech talent at larger firms? Among other factors, there is a trend toward ‘super individual contributors,’ who operate at a scope and impact level historically reserved for engineering managers and directors, the SignalFire study’s authors pointed out: “As AI tools collapse the work that used to require coordination across multiple specialists, a single capable engineer can now own end-to-end product surfaces that would have required a team of five to six people in 2019.”  

Tellingly, top computer science grads in 2025 were twice as likely to call themselves a ‘founder’ compared to the 2022 class, and 45% less likely to land a job at a tech major. Startups, meanwhile, were hiring at a healthier clip. 

Hiring of engineering talent at large tech companies dropped by 11% year over year. By contrast, at early-stage startups, engineering hiring was up 7%. However, occupations outside software engineering can still see tough times, even within startups, the study’s authors suggested. Design-focused hiring at startups was down 22%, and marketing was down 18%. 

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Graduates from the top 20 US computer science programs in 2025 were 45% less likely to take an engineering role at a tech major compared to just a few years ago, the study’s authors found. 

“Software engineering graduates used to spend their first 12 to 18 months writing boilerplate code, running unit tests, and performing routine debugging while learning production systems under a mentor,” the report suggested. 

“Those are exactly the types of tasks that the tech majors have automated with AI. Facing record competition for a shrinking number of junior seats, the most AI-fluent graduates are using that fluency to build their own startups instead of waiting out a frozen job market.”  

Pre-pandemic levels

There are more startups, but “more hiring at startups doesn’t mean bigger startups,” the study’s authors cautioned. “While aggregate hiring in the early-stage startup ecosystem sits close to pre-pandemic levels, the underlying data reveals that startup team sizes are shrinking. Startups are shipping more products with fewer full-time employees.”