I constantly find myself talking with colleagues, old friends and fellow parents at soccer games about how everything costs more than it used to. Restaurant entree costs are jaw dropping. Gas prices are relentless. And don’t get people started on the price of eggs.

But one thing that’s certainly less expensive today - and is a hopeful sign during national small business month - is how little it costs to start a business.

In the past 25 years, the cost of starting a business has shrunk from $5 million to $500. The statistic certainly stopped me in my tracks. But serial entrepreneur and Columbia Business School assistant professor of practice Mattan Griffel , who teaches a “foundations of entrepreneurship” class similar to the introductory entrepreneurship class I taught at Iona University had plenty of raw data to back up his findings.

In 2000, when a company wanted to start a business, Griffel estimated that founders spent $5 million on on-premise servers, Oracle licenses and six figure employee salaries. The numbers shrunk to only $500,000 thanks to open source software which made licensed technology far more accessible.

But Griffel notes that five years after that, in 2008, the launch of cloud computing shrunk business startup costs to just $50,000. By 2012, the costs for cloud hosting became nearly free. App stores allowed for global distribution and companies could rely on Stripe to process payments. That shrunk startup business costs to less than $10,000. By 2020, founders could spend less than $5,000 to launch a business with serverless hosting and no code tools.

But Griffel says the biggest differentiator that has shrunk startup costs is AI. With vibe coding and free tiers of LLMs, it costs next to nothing to start a business.

“Before AI, someone with a business idea couldn’t build it without a technical person,” said Griffel. “To get a business off the ground, it’s never been possible to do something as cheap as this with AI.”

Griffel has seen this drastically change in his lifetime as an entrepreneur. Since he launched his first startup in 2011, he notes how much easier it has become to work with technology.

“A friend of mine heard me pitch a startup idea and he basically encouraged me to teach myself how to code.” Griffel added about how he had to learn to use technology. “That was the start for me of this long journey of learning about coding and learning about products and building startups.”

Late last month, I attended an Iona University Innovation Competition to cheer on the mentees I have been working with for the past year. I quickly realized how much Griffel’s estimates applied to my own students. In fact, three of my mentors spent less than $500 combined to start three separate pitch competition winning businesses. They all credited AI.

“We are in the golden age of people making something themselves with technology," said Jared Balacer , my mentee who won the $10,000 prize for his educational startup Curriosity. “A year ago, it would have required an entire development team."

For $76, Balcacer bought $20 in credits for API, $1 on a domain, $10 for a t-shirt to put the vinyl letters of his company name, a $30 paper board to present his presentation on and $15 in business cards. With the $10,000 he won at the competition, he calculates he can run his business for 14 months. He also estimates that AI can build his business while he works at his summer internship at the Yonkers Police Department.

“I have everything running on the background of my computer at home. I can access it on my phone. I can see everything that’s going on. At home, it’s teaching itself the things I need it to learn to provide students with the proper material. I come home from work and sit down and work on it for 2 to 3 hours and it can build itself,” he said. “If you have time on your hands and you have a computer or a phone, you have the opportunity to make something out of nothing.”

Mathew Mountain , who started the company Givva which lets college students sell off used refrigerators and dorm items to fellow classmates, spent $25 on Replit to design and code his website. With that website, he found 85 students to sell dorm fridges and furniture they were trying to unload and took a combined cut of $400 from their sales. He used the student version of Chat GPT to answer any questions he had.

“I leaned heavily on AI with exploring ‘what if’ scenarios? What is realistic and what may be overcomplicating things?” he said. “It’s able to help me stay focused on what mattered and what is realistic rather than what I wanted to happen.”

Daniel Lima , an Iona student who launched his financial education app which helps students figure out how to pay for college spent $332.90 in the past 12 months building his business. He started creating his website with a free version of Lovable and spent $20 a month on a Claude Pro subscription.

“Claude has helped me in terms of ideating and building the website as well as using Lovable more efficiently,” said Lima. “I can have Claude generate prompts for me that I feed into Lovable.”

By having access to cheaper technology, Lima said he has been able to focus on building other aspects of the business.

“I think that has helped Edify grow faster, the fact that I don’t have to be so concentrated on the technical side,” he said. “I can really just go talk to people, do these workshops and implement quickly.”

Griffel predicts that these lower costs for starting a business may mean more people enter the game. But that doesn’t mean every budding entrepreneur will understand how to building thriving long-term businesses.

“You’re going to see a lot more businesses being built. That’s good and bad,” said Griffel. “It’s going to be hard to figure out the actual quality of businesses.”