'Disrupted or dead': AI crushes a generation of startups built before ChatGPT (www.cnbc.com)

A significant shakeout is unfolding in the startup landscape as nearly half of the United States' 857 unicorns have not raised fresh funding in three years, according to a new PitchBook report. Valuations for startups last funded in 2021 have plummeted by an average of 68%, while those from 2022 have seen a 52% decline. This trend has left over 220 companies classified as "fallen unicorns," including prominent brands like Glossier and Savage X Fenty. The rise of generative AI, particularly the transformative impact of ChatGPT, has disrupted the valuation of traditional startups, redirecting investment towards AI-native firms and revealing significant flaws in pre-AI business models. The emergence of AI technologies has accelerated the pace at which startups can develop software, allowing smaller teams to achieve what once required much larger workforces. As venture capitalists shift focus towards AI-centric companies, older startups find themselves unable to justify prior valuations or secure funding without solid profitability. Industry experts highlight that many of these older firms depend on outdated cost structures and software that may not adapt to the new AI landscape, necessitating a radical shift in strategy to survive. The broader implications for the AI/ML community are significant; as generative AI reshapes the startup ecosystem, businesses must evolve their models to remain competitive or face obsolescence in a rapidly changing market.