diff --git a/packages/create-react-native-library/src/exampleApp/generateExampleApp.ts b/packages/create-react-native-library/src/exampleApp/generateExampleApp.ts
index c3f6aff02..b8df1856b 100644
--- a/packages/create-react-native-library/src/exampleApp/generateExampleApp.ts
+++ b/packages/create-react-native-library/src/exampleApp/generateExampleApp.ts
@@ -68,6 +68,7 @@ export default async function generateExampleApp({
         '--version',
         reactNativeVersion,
         '--skip-install',
+        '--skip-git-init',
         '--pm',
         'npm',
       ];
diff --git a/packages/create-react-native-library/src/index.ts b/packages/create-react-native-library/src/index.ts
index 33d87bfb2..14b95ee26 100644
--- a/packages/create-react-native-library/src/index.ts
+++ b/packages/create-react-native-library/src/index.ts
@@ -160,7 +160,28 @@ async function create(_argv: Args) {
       folder,
     });
   } else {
-    await createInitialGitCommit(folder);
+    spinner.text = 'Initializing git repository';
+
+    try {
+      const abortController = new AbortController();
+
+      // Creating git repository can get stuck in some cases,
+      // e.g. if git asks for ssh passphrase.
+      // We abort it after a timeout so that this doesn't hang forever.
+      await Promise.race([
+        createInitialGitCommit(folder, abortController.signal),
+        new Promise<void>((_resolve, reject) => {
+          setTimeout(() => {
+            const error = new Error('Creating git repository took too long');
+
+            abortController.abort(error.message);
+            reject(error);
+          }, 5000);
+        }),
+      ]);
+    } catch (error) {
+      spinner.warn('Failed to create git repository');
+    }
 
     printSuccessMessage();
 
diff --git a/packages/create-react-native-library/src/utils/initialCommit.ts b/packages/create-react-native-library/src/utils/initialCommit.ts
index fe76e760e..5d011a957 100644
--- a/packages/create-react-native-library/src/utils/initialCommit.ts
+++ b/packages/create-react-native-library/src/utils/initialCommit.ts
@@ -1,25 +1,22 @@
 import { spawn } from './spawn';
 
-export async function createInitialGitCommit(folder: string) {
-  let isInGitRepo = false;
-
-  try {
-    isInGitRepo =
-      (await spawn('git', ['rev-parse', '--is-inside-work-tree'])) === 'true';
-  } catch (e) {
-    // Ignore error
-  }
+export async function createInitialGitCommit(
+  folder: string,
+  signal?: AbortSignal
+) {
+  const isInGitRepo =
+    (await spawn('git', ['rev-parse', '--is-inside-work-tree'], {
+      cwd: folder,
+      signal,
+    })) === 'true';
 
   if (!isInGitRepo) {
-    try {
-      await spawn('git', ['init'], { cwd: folder });
-      await spawn('git', ['branch', '-M', 'main'], { cwd: folder });
-      await spawn('git', ['add', '.'], { cwd: folder });
-      await spawn('git', ['commit', '-m', 'chore: initial commit'], {
-        cwd: folder,
-      });
-    } catch (e) {
-      // Ignore error
-    }
+    await spawn('git', ['init'], { cwd: folder, signal });
+    await spawn('git', ['branch', '-M', 'main'], { cwd: folder, signal });
+    await spawn('git', ['add', '.'], { cwd: folder, signal });
+    await spawn('git', ['commit', '-m', 'chore: initial commit'], {
+      cwd: folder,
+      signal,
+    });
   }
 }
diff --git a/tsconfig.json b/tsconfig.json
index 5535c97be..b5a42828a 100644
--- a/tsconfig.json
+++ b/tsconfig.json
@@ -32,7 +32,7 @@
     "verbatimModuleSyntax": true
   },
   "exclude": [
-    "lib",
+    "**/lib",
     "packages/react-native-builder-bob/src/__fixtures__",
     "packages/create-react-native-library/templates"
   ]