How Founder Expertise Shapes the Impact of Generative Artificial Intelligence on Digital Ventures
Ruiqing Cao, Abhishek Bhatia
TL;DR
This paper investigates how GenAI affects the formation and early growth of digital ventures using a category-level difference-in-differences design that exploits exogenous variation in GenAI usage across venture categories. It combines Product Hunt launches with Revelio, CrunchBase, and PitchBook data to measure access (launch likelihood and speed) and performance (VC funding) while examining how founder technical and managerial expertise moderates these effects. The findings show that GenAI reduces break-even costs and accelerates product launches, with larger access gains for founders lacking managerial experience, and that technical backgrounds magnify GenAI's positive impact on securing VC funding. The results imply that GenAI expands entrepreneurial entry for less-managerial founders and enhances venture performance for technically proficient founders, underlining the importance of human-AI complementarity and the diffusion of GenAI-enabled capabilities across markets.
Abstract
The rapid diffusion of generative artificial intelligence (GenAI) has substantially lowered the costs of launching and developing digital ventures. GenAI can potentially both enable previously unviable entrepreneurial ideas by lowering resource needs and improve the performance of existing ventures. We explore how founders' technical and managerial expertise shapes GenAI's impact on digital ventures along these dimensions. Exploiting exogenous variation in GenAI usage across venture categories and the timing of its broad availability for software tasks (e.g., GitHub Copilot's public release and subsequent GenAI tools), we find that the number of new venture launches increased and the median time to launch decreased significantly more in categories with relatively high GenAI usage. GenAI's effect on new launches is larger for founders without managerial experience or education, while its effect on venture capital (VC) funding likelihood is stronger for founders with technical experience or education. Overall, our results suggest that GenAI expands access to digital entrepreneurship for founders lacking managerial expertise and enhances venture performance among technical founders.