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AI Coding Tools and Digital Entrepreneurship: The Role of Software Expertise

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  • Ruiqing Cao
  • Abhishek Bhatia

Abstract

While digital technologies expand entrepreneurial access by providing technical resources, it is less known whether they enable ventures to create durable value and whether they can substitute for technical expertise accumulated through software work experience. This paper studies how digital ventures respond to the wide diffusion of AI coding tools, and how these responses are shaped by founders' software expertise. Measuring product-category exposure to AI coding using pre-LLM product descriptions and linking venture launch, traffic, and financing data, we show that exposure to AI coding increases first-time venture launches after 2022Q4, while entrants are less likely to survive but raise more financing conditional on one-year survival. Crucially, founders with software work experience drive a larger fraction of new launches, ameliorate the decline in survival when product development is partially rather than fully automated, and explain all of the increase in venture financing.

Suggested Citation

  • Ruiqing Cao & Abhishek Bhatia, 2025. "AI Coding Tools and Digital Entrepreneurship: The Role of Software Expertise," Papers 2511.06545, arXiv.org, revised Sep 2026.
    • Handle: RePEc:arx:papers:2511.06545
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    References listed on IDEAS

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