In recent years, with the rise of innovation and entrepreneurship, the decision tree ID3 algorithm is more and more widely used in innovation and entrepreneurship analysis models. The decision tree ID3 algorithm is an effective data mining technology, which can mine useful information from a large number of data and provide a scientific basis for innovation and entrepreneurship. The traditional ID3 algorithm has obvious convergence characteristics, which limits its application in innovation and entrepreneurship analysis models. Therefore, it is important to optimize the ID3 algorithm to improve its computational efficiency and accuracy. From the perspective of the innovation and entrepreneurship analysis model, the application of the decision tree ID3 algorithm in innovation and entrepreneurship is studied. The basic principle, advantages, and disadvantages of the ID3 algorithm are analyzed, and a method to optimize the ID3 algorithm is proposed. Through the experimental verification, the application effect of the optimized ID3 algorithm in the analysis model of innovation and entrepreneurship is proved. When the number of records is 5200, the error rate of the optimization algorithm is 70%, while the error probability of the classical algorithm is 95%. When the number of records is 7200, the error rate of the optimized calculation method is 130%, while the error rate of the classic ID3 calculation method is 170%. As the number of records increases, the error rates of both optimization algorithms and classical algorithms will increase. As the number of records increases, the error rate of the optimized ID3 algorithm increases less than that of the classical algorithm. The optimized ID3 algorithm can significantly improve computational efficiency and accuracy and provide an effective data mining technology for innovation and entrepreneurship analysis models.