Prompted to Start: How Generative AI is Transforming Entrepreneurship

Jan Bena, Bo Bian and Mariassunta Giannetti

No 21982, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Artificial intelligence; Startups; Agglomeration (search for similar items in EconPapers)
JEL-codes: J24 L26 M13 O33 (search for similar items in EconPapers)
Date: 2026-09
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