--- title: "Why Pre-ChatGPT Startups Now Face a Reckoning… | Metaintro" canonical: "https://www.metaintro.com/blog/why-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts" language: "en" author: "drashtigarach" published: "2026-06-02T15:24:29.000Z" modified: "2026-06-02T16:49:43.099Z" --- [Back to Blog](/blog) [News](/blog/tag/news)[Technology](/blog/tag/technology)[Jobs](/blog/tag/jobs)[Layoffs](/blog/tag/layoffs) # Why Pre-ChatGPT Startups Now Face a Reckoning and Job Cuts PitchBook data shows 857 US unicorns under strain, with 220+ fallen below $1B and half unfunded for three years as AI shifts hiring. See what it means for you. [![Drashti Garach](https://cdn.metaintro.com/rs:fill:40:40/q:72/plain/images/5719d740-e510-42bc-8017-e040d145f35f_1766029465094.png)Drashti Garach @DrashtiGarach](/blog/author/drashtigarach) [June 2, 2026](/blog/archive/2026/06)11 min read ![Why Pre-ChatGPT Startups Now Face a Reckoning and Job Cuts](https://cdn.metaintro.com/rs:fill:1200:675/q:78/plain/images/kai.2NbnUPsp.png) [https://x.com/intent/tweet?text=Why%20Pre-ChatGPT%20Startups%20Now%20Face%20a%20Reckoning%20and%20Job%20Cuts&url=https%3A%2F%2Fwww.metaintro.com%2Fblog%2Fwhy-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts](https://x.com/intent/tweet?text=Why%20Pre-ChatGPT%20Startups%20Now%20Face%20a%20Reckoning%20and%20Job%20Cuts&url=https%3A%2F%2Fwww.metaintro.com%2Fblog%2Fwhy-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts)[http://www.facebook.com/sharer.php?u=https%3A%2F%2Fwww.metaintro.com%2Fblog%2Fwhy-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts](http://www.facebook.com/sharer.php?u=https%3A%2F%2Fwww.metaintro.com%2Fblog%2Fwhy-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts)[https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Fwww.metaintro.com%2Fblog%2Fwhy-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts&title=Why%20Pre-ChatGPT%20Startups%20Now%20Face%20a%20Reckoning%20and%20Job%20Cuts](https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Fwww.metaintro.com%2Fblog%2Fwhy-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts&title=Why%20Pre-ChatGPT%20Startups%20Now%20Face%20a%20Reckoning%20and%20Job%20Cuts)[mailto:?subject=Why%20Pre-ChatGPT%20Startups%20Now%20Face%20a%20Reckoning%20and%20Job%20Cuts&body=https%3A%2F%2Fwww.metaintro.com%2Fblog%2Fwhy-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts](mailto:?subject=Why%20Pre-ChatGPT%20Startups%20Now%20Face%20a%20Reckoning%20and%20Job%20Cuts&body=https%3A%2F%2Fwww.metaintro.com%2Fblog%2Fwhy-pre-chatgpt-startups-now-face-a-reckoning-and-job-cuts) A wave of startups founded before ChatGPT arrived in late 2022 is now facing a hard financial reckoning, and the job market is feeling it. According to [PitchBook](https://pitchbook.com/) data reported by [CNBC](https://www.cnbc.com/2026/06/01/ai-startup-valuations-pre-chatgpt.html), there are 857 US startups valued at one billion dollars or more, yet nearly half of them have not raised new funding in the past three years. With more than 250 billion dollars flooding toward a handful of AI giants, older companies are squeezed out of fresh capital while staying too unprofitable for public markets. At [Metaintro](https://www.metaintro.com), we track these shifts because they reshape where the jobs are, and this one is moving fast. ## What Exactly Did PitchBook Find? The headline number is striking. PitchBook counted 857 US companies that still carry private valuations of one billion dollars or more, the threshold that earns a startup the label of unicorn. Of that group, close to half have gone three years or longer without raising a fresh round of venture capital. In a market that prizes momentum, a long funding gap is rarely a good sign. The data also names a growing class of so-called fallen unicorns. More than 220 companies that once commanded billion-dollar valuations have since dropped below that level. The decline is steepest for companies whose last big raise came during the funding boom. Startups that last raised in 2021 have lost an average of 68 percent of their value, while those that last raised in 2022 are down roughly 52 percent. Those are not paper bruises. They reset what a company can borrow, how it can recruit, and whether it can keep paying its existing team. PitchBook analyst Andrew Akers summed up the warning sign plainly, telling [CNBC](https://www.cnbc.com/2026/06/01/ai-startup-valuations-pre-chatgpt.html) that "When we see companies not raising, it's a red flag." For employees, that red flag often shows up first as a hiring freeze and later as a restructuring. ## Why Is AI Pulling Money Away From Older Startups? The simplest explanation is concentration. Venture capital has always chased the next big thing, but the AI cycle has been unusually lopsided. More than 250 billion dollars has been committed to a short list of model builders such as [OpenAI](https://openai.com/) and [Anthropic](https://www.anthropic.com/) ahead of anticipated public offerings. When that much capital pools around a few names, there is far less left over for everyone else. That leaves pre-ChatGPT startups in an awkward middle. Many were built on software playbooks that looked cutting edge in 2021 but feel ordinary in a world where AI features are expected as standard. Investors are reluctant to back a fresh round at the old sky-high valuation, and the founders are reluctant to accept a lower one that would wipe out earlier backers and employees holding stock options. The result is a standoff that can stretch on for years. Samir Kaul, a partner at [Khosla Ventures](https://www.khoslaventures.com/) and an early backer of OpenAI, captured the productivity shift driving investor thinking. He told [CNBC](https://www.cnbc.com/2026/06/01/ai-startup-valuations-pre-chatgpt.html) that "now you're seeing 50 engineers do what it would've taken 500 engineers to do five years ago." When a smaller team can ship the same product, the math for a bloated startup changes overnight. ## Which Companies Are Getting Hit Hardest? The pain is not spread evenly. Enterprise software companies sit at the center of the storm. PitchBook found that 75 software-as-a-service firms appear on its fallen unicorn list, roughly double the number of fintech companies, the next largest group. These are the back-office and productivity tools that powered the last decade of remote work, and many now look replaceable by AI-native rivals or by features baked into bigger platforms. The named examples make the trend concrete. Consumer brands such as [Glossier](https://www.glossier.com/), [Savage X Fenty](https://www.savagex.com/), [AG1](https://drinkag1.com/), and [The Farmer's Dog](https://www.thefarmersdog.com/) have all slipped from their peaks, as have software names like scheduling tool [Calendly](https://calendly.com/). Coverage from [The Next Web](https://thenextweb.com/news/ai-startup-valuations-pre-chatgpt-fallen-unicorns) and other outlets has documented similar pressure across the sector. Some individual drops are severe. According to figures cited by [Tech Startups](https://techstartups.com/2026/06/01/ai-is-killing-the-unicorns-more-than-220-unicorn-startups-are-now-worth-less-than-half-their-peak-value/), learning-software maker [Articulate](https://www.articulate.com/) has fallen about 82 percent from a 3.75 billion dollar peak, and drone maker [Skydio](https://www.skydio.com/) is down around 80 percent. For job seekers, the lesson is not to avoid these companies outright. Plenty will adapt and survive. The lesson is to read the funding history before you sign. A company that last raised in 2021 and has gone quiet since is in a different position than one that closed a round this year. ## How Are These Pressures Turning Into Job Cuts? Valuation stress and lean AI teams point in the same direction, which is smaller headcounts. When a startup cannot raise, it has to fund its own growth, and payroll is usually the largest expense. When AI tools let a smaller group do the work, the temptation to cut deepens. The clearest recent example is [ClickUp](https://clickup.com/). As reported by [TechCrunch](https://techcrunch.com/2026/05/25/what-clickups-mass-layoff-tells-us-about-the-future-of-work/), the productivity company cut 22 percent of its workforce in early 2026. Chief executive Zeb Evans framed the move not as simple cost cutting but as a bet on automation, saying the company had deployed thousands of internal AI agents and that "the people that automate their jobs with AI will always have a job." He added that much of the savings would flow to remaining staff through higher pay bands. That framing matters. The cuts hitting these companies are often not about a failing product. They reflect a deliberate choice to run a thinner organization where each person oversees AI output instead of producing every piece of work by hand. The roles that disappear tend to be the routine ones. The roles that remain demand more judgment. ## What Does This Mean for Your Career? If you work at, or are interviewing with, a startup founded before the AI boom, this is the moment to do extra homework. Look up when the company last raised money and at what valuation. A multiyear gap is the single most useful warning sign you can check, and it is public information. Ask directly in interviews about runway and hiring plans. A healthy company will answer. It also pays to position yourself as someone who works with AI rather than against it. [Metaintro](https://www.metaintro.com) CEO Lacey Kaelani has argued that AI augments workers more than it replaces them wholesale, and that companies leaning hardest into automation still need people to validate and manage what the AI produces. That is the skill set surviving teams are hiring for. If you can show that you direct AI tools, check their output, and turn them into business results, you become the person a leaner company wants to keep. Our [guide to writing a resume that beats AI screening](https://www.metaintro.com/blog/how-to-write-resume-beats-ai-screening-2026) is a practical place to start. Finally, widen your search. The same capital that left legacy startups is creating fresh roles inside AI infrastructure, applied AI at large firms, and the services that support both. Keeping an eye on funding flows, not just job titles, helps you spot where hiring is genuinely growing. The reckoning is real, but so is the opportunity for workers who move toward where the money is going. ## How Can You Tell If a Startup Is Built to Last? Before you sign an offer or stay put through a wobbly stretch, it helps to read a company the way an investor would. Start with the timeline of its fundraising. When a startup last raised money, and at what valuation, tells you a great deal about how much pressure it is under. A long gap since the last round often means the company is either running lean by choice or struggling to convince new backers to write a check. Neither is automatically fatal, but the difference matters, and you can usually piece together the story from public announcements and news coverage. If a company has gone quiet on funding for a long stretch while peers keep raising, treat that as a question to resolve rather than a detail to ignore. Interviews are your best chance to test the story directly, so use them. Ask how long the current cash runway is and what the plan is when it runs out. Ask whether the team is growing, holding steady, or shrinking, and how that has changed over the past year. Ask what the path to profitability looks like and how close the company is to it. These are reasonable questions, and the way a hiring manager answers them is itself a signal. Confident, specific answers suggest leaders who know their numbers. Vague reassurance or visible discomfort suggests the opposite. A company that is genuinely healthy has no reason to dodge, and most will respect a candidate who thinks like an owner rather than only a job seeker. Pay attention to the softer signals too, because they often surface before the financial ones become public. Frequent leadership turnover, sudden shifts in strategy, hiring freezes that arrive without explanation, and a steady trickle of quiet departures can all point to underlying stress. None of these is proof on its own, and even strong companies go through rough patches. But when several of them cluster together, they paint a picture worth taking seriously. The goal is not to talk yourself out of every opportunity at an older startup. Plenty of them are adapting well and will come out stronger. The goal is to go in with clear eyes, so that if a reckoning does reach your employer, you are not the last person to see it coming. Finally, build a little resilience into your own situation regardless of how solid your current role looks. Keep your skills current, stay loosely connected to people in roles and companies you admire, and keep a realistic sense of what your work is worth elsewhere. The shift toward leaner organizations is not going to reverse quickly, which means the most durable career strategy is to make yourself the kind of person a smaller, sharper team still needs. That is true whether your employer is thriving or thinning out, and it is the surest hedge against whatever the next round of cuts brings. It also helps to weigh the business itself, not just its balance sheet. Ask yourself whether the product would still be hard to copy if a larger platform decided to build a similar feature, and whether customers would genuinely miss it. Companies with a clear, defensible reason to exist tend to weather lean stretches better than those whose main advantage was simply getting to market early. A few honest conversations with current and former employees can tell you more than any press release, so reach out where you can and listen for what people choose not to say as much as what they do. ## People Also Asked ### Q: What is a fallen unicorn? A: A fallen unicorn is a startup that once reached a private valuation of one billion dollars or more and has since dropped below that level. PitchBook data reported by CNBC counted more than 220 such companies, with the steepest declines among startups that last raised money in 2021 and 2022. ### Q: Why are pre-ChatGPT startups struggling to raise money? A: Investor capital has concentrated heavily around a few AI leaders such as OpenAI and Anthropic, with more than 250 billion dollars committed ahead of anticipated public offerings. That leaves older software startups competing for a much smaller pool of funding, and many cannot justify their 2021-era valuations in today's market. ### Q: How does this affect job seekers right now? A: Funding pressure and AI-driven efficiency are pushing companies toward smaller teams, as seen when ClickUp cut 22 percent of staff in early 2026. Job seekers should check a company's last funding date, ask about runway in interviews, and build skills in working alongside AI tools. Looking for your next opportunity? [Metaintro](https://www.metaintro.com) connects professionals to roles beyond the job board. 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