[2512.06506] AI as "Co-founder": GenAI for Entrepreneurship

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Economics > General Economics

arXiv:2512.06506 (econ)

[Submitted on 6 Dec 2025]

Title:AI as "Co-founder": GenAI for Entrepreneurship

Authors:Junhui Jeff Cai, Xian Gu, Liugang Sheng, Mengjia Xia, Linda Zhao, Wu Zhu<br>View a PDF of the paper titled AI as "Co-founder": GenAI for Entrepreneurship, by Junhui Jeff Cai and 5 other authors

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Abstract:This paper studies whether, how, and for whom generative artificial intelligence (GenAI) facilitates firm creation. Our identification strategy exploits the November 2022 release of ChatGPT as a global shock that lowered start-up costs and leverages variations across geo-coded grids with differential pre-existing AI-specific human capital. Using high-resolution and universal data on Chinese firm registrations by the end of 2024, we find that grids with stronger AI-specific human capital experienced a sharp surge in new firm formation$\unicode{x2013}$driven entirely by small firms, contributing to 6.0% of overall national firm entry. Large-firm entry declines, consistent with a shift toward leaner ventures. New firms are smaller in capital, shareholder number, and founding team size, especially among small firms. The effects are strongest among firms with potential AI applications, weaker financing needs, and among first-time entrepreneurs. Overall, our results highlight that GenAI serves as a pro-competitive force by disproportionately boosting small-firm entry.

Subjects:

General Economics (econ.GN); Artificial Intelligence (cs.AI); Applications (stat.AP)

Cite as:<br>arXiv:2512.06506 [econ.GN]

(or<br>arXiv:2512.06506v1 [econ.GN] for this version)

https://doi.org/10.48550/arXiv.2512.06506

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arXiv-issued DOI via DataCite

Submission history<br>From: Junhui Cai [view email]<br>[v1]<br>Sat, 6 Dec 2025 17:36:36 UTC (750 KB)

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