When the pandemic hit, the coffee shop sent workers home, and Mr. Atout’s salary was cut. Home all day and their income uncertain, the couple began to take the prospect of a music career more seriously. They set up a website and opened a business, Songlorious, writing custom songs for weddings, birthdays and similar events. Within weeks, they had more business than they could handle and began hiring other musicians to help out. Last fall, Mr. Atout quit his railroad job to work on the venture full time.
“I think the pandemic kind of forced us into this a little bit,” he said. “It gave us a nudge where I’ve always wanted to do something but I was too scared because I didn’t want to lose the stability of my job.”
Songlorious is in many ways typical of Covid-era start-ups. It is an online-only business in a field, performing arts, that was heavily disrupted by the pandemic. Its founders started the company at least partly out of financial necessity. And though it began in New York, they are building the business in a midsize city, Chattanooga, Tenn., where they moved in December looking in part for a lower cost of living. Early evidence suggests the increase in start-ups has been strongest outside the big-city downtowns that have been hit hard by the exodus of office workers.
The increase was probably driven, to some extent, by the layoffs that left millions of people out of work early in the pandemic. Researchers at the Kauffman Foundation found that about 30 percent of new entrepreneurs last year were unemployed when they started their businesses, roughly double the prepandemic rate.
The preceding recession, more than a decade earlier, also led to millions of job losses, but entrepreneurship, by a variety of measures, fell sharply and rebounded only slowly. It was accompanied by a financial crisis and a collapse in home values, which made it difficult to get capital to start businesses.
This time may have been different partly because would-be entrepreneurs were more likely to have the wherewithal to pursue their visions. Swift action by the Federal Reserve helped prevent a financial crisis, and home prices boomed.
The government also handed out hundreds of billions of dollars in unemployment benefits, direct checks to households and other aid. Mr. Atout said federal stimulus checks had helped him and Ms. Hodges make ends meet while they got their business running.