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Prompted to Start: How Generative AI is Transforming Entrepreneurship

Author

Listed:
  • Bena, Jan
  • Bian, Bo
  • Giannetti, Mariassunta

Abstract

We show that following the diffusion of GenAI, industries with higher task-level exposure experience 20% more startup formation than less-exposed industries, and a growing share of these startups offer AI products rather than merely automating operations. Entry extends beyond innovation hubs into regions with limited venture capital and thin specialized labor markets. While individual entrants are smaller, aggregate entry generates net employment and wage growth at the industry level, including in the occupations most exposed to GenAI. GenAI also changes who becomes an entrepreneur: founders are more specialized, come from high-GenAI-exposure occupations, and emphasize technical skills rather than capital-raising expertise.

Suggested Citation

  • Bena, Jan & Bian, Bo & Giannetti, Mariassunta, 2026. "Prompted to Start: How Generative AI is Transforming Entrepreneurship," CEPR Discussion Papers 21982, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21982
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    File URL: https://cepr.org/publications/DP21982
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    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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