The rapid rise of artificial intelligence is reshaping the startup landscape, leaving many companies built before ChatGPT struggling to justify their valuations, reported by CNBC.
According to PitchBook data cited in the report, nearly half of America's 857 unicorn startups have not raised fresh funding in at least three years. More than 220 former billion-dollar companies have reportedly fallen below unicorn status as investors redirect capital toward AI-focused ventures.
Industry executives and investors told CNBC that generative AI has fundamentally changed how software businesses are built and valued. Tasks that once required hundreds of engineers can now be completed by much smaller teams using AI tools, reducing costs and increasing competition.
'Disrupted or dead': AI is crushing a generation of startups built before ChatGPT https://t.co/eJb5MyYcuq
— CNBC (@CNBC) June 1, 2026
The report said many pre-AI startups remain burdened by larger workforces, outdated products and business models designed for a different era. Software-as-a-service companies have been particularly affected, with enterprise software facing growing disruption from AI-powered automation.
Well-known consumer brands and technology firms, including Glossier, Brooklinen, Betterment, AG1 and SeatGeek, were identified among the startups whose valuations have declined.
Investors cited in the report warned that many older startups could face discounted acquisitions, restructurings or closure unless they successfully reinvent themselves around AI. As venture funding increasingly flows to AI-native companies, analysts say the broader shakeout may only be beginning.
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