The surge of artificial intelligence, particularly since the launch of ChatGPT in 2022, has severely impacted a generation of startups, with many facing “disruption or death.” Nearly half of the 857 U.S. unicorn startups, which were once valued at over a billion dollars, have not raised new funding in the past three years, and those that last secured funding in 2021 see an average valuation decline of 68%. As investors increasingly shift their focus toward AI-native companies, traditional exit strategies such as talent acquisitions are becoming less feasible for older firms, reflecting a fundamental disruption in business models whereby enterprise software reliant on per-user pricing is threatened by new AI automation capabilities.
AG1: AG1 is a powder supplement maker known for podcast advertising and direct-to-consumer sales. It appears on PitchBook’s list of fallen unicorns amid the broader challenges for non-AI companies in securing new venture capital.
OpenAI: OpenAI is a leading artificial intelligence research and deployment company focused on developing advanced generative AI models and tools. In the context of this news, the company’s rapid rise and massive funding inflows are cited as a primary driver redirecting venture capital away from pre-ChatGPT era startups toward AI-native firms.
Mercury: Mercury is a financial services company offering banking to early-stage U.S. venture-backed firms. Its CEO provided commentary on the difficulties non-AI startups encounter when trying to raise funding in an AI-dominated environment.
Calendly: Calendly is a scheduling software startup in the enterprise SaaS category. It is highlighted as part of the largest group of fallen unicorns, reflecting how generative AI threatens traditional workflow-based software models.
Glossier: Glossier is a direct-to-consumer beauty and skincare brand that achieved unicorn status during the pre-AI venture boom. It is listed among the fallen unicorns whose valuations have declined sharply due to the redirection of capital toward AI companies.
SeatGeek: SeatGeek is an online ticket marketplace that reached unicorn valuation during the pre-AI boom. The news lists it as an example of a company now classified as a fallen unicorn due to outdated technology and valuation resets.
Anthropic: Anthropic is an AI safety and research company developing large language models and enterprise AI solutions. The news highlights how substantial investments into Anthropic alongside OpenAI have accelerated the shift in venture funding priorities, leaving many legacy startups without capital.
David Zhu: David Zhu is the founder of Reevo, an AI platform for automating corporate sales and marketing, and previously led engineering at DoorDash. He described the seismic shift caused by generative AI, predicting that many workflow-driven enterprise SaaS companies will be disrupted or fail without a full pivot to AI-native approaches.
PitchBook: PitchBook is a private markets data and analytics firm that tracks venture funding, valuations, and company performance. It supplied the data and list of fallen unicorns used in the article to illustrate the impact of the AI boom on pre-2022 startups.
Betterment: Betterment is a pioneer in robo-advisory services for personal investing. It is named among the fallen unicorns struggling with stale valuations and reduced appeal to investors after the shift to AI-focused opportunities.
Samir Kaul: Samir Kaul is a partner at Khosla Ventures, a venture firm that was an early backer of OpenAI. He is quoted in the news explaining how the arrival of ChatGPT prompted investors to fundamentally rethink company valuations and shift focus to AI-driven productivity gains.
Immad Akhund: Immad Akhund is the CEO of Mercury, a provider of banking services to early-stage venture-backed companies. He commented on how non-AI-first startups face challenges raising funds amid the current focus on AI companies.
Savage X Fenty: Savage X Fenty is a lingerie and apparel company founded by musician Rihanna that reached unicorn valuation in the earlier venture cycle. The news includes it as an example of a pre-ChatGPT startup now facing reduced valuations and limited funding access.
The Farmer’s Dog: The Farmer’s Dog is a direct-to-consumer pet food company that attained unicorn status before the AI era. It is cited in the article as one of the more than 220 fallen unicorns whose prior valuations no longer hold in the current market.
`json
{
“Valuation Compression”: “Companies with outdated valuations from previous periods face significant declines, making traditional exit strategies like talent acquisitions less viable.”,
“Business Model Disruption”: “Enterprise SaaS models centered on per-user pricing and manual workflows are being disrupted by AI automation and technologies, leading to a shift toward outcome-based pricing.”,
“Venture Capital Reallocation”: “Investor focus and funding are now directed toward AI-native companies, leaving many pre-ChatGPT startups without new capital.”
}
`