AI kills unicorns: 220+ startups now worth less than half peak value
Chegg lost 99% of value; 220+ unicorns see valuations halved as AI disrupts
Five years ago, Chegg was valued at $14 billion. Today it's worth just $146 million — a 99% collapse triggered by ChatGPT. The online education giant laid off 45% of its workforce in late 2025, citing AI-driven shifts in student behavior. Chegg is just one example of a broader trend: generative AI is resetting the startup landscape, making previously frothy valuations unsustainable.
According to a CNBC analysis of PitchBook data, more than 220 U.S. startups that once carried $1 billion+ valuations are now fallen unicorns. Nearly half of America’s 857 unicorns haven't raised fresh capital in three years. Companies that last raised in 2021 are down 68% on average; those from 2022 are down 52%. Venture firms like Khosla Ventures emphasize that AI allows 50 engineers to do the work of 500, forcing a complete reshuffling of how startups are valued.
- Chegg's market cap fell from $14B to $147M — a 99% loss — after ChatGPT disrupted homework help.
- 220+ U.S. unicorn startups are now worth less than half their peak valuation, per PitchBook data.
- Startups last funded in 2021 have lost 68% of their value on average, with 52% declines for 2022 rounds.
Why It Matters
AI is forcing a historic valuation reset across venture capital, threatening thousands of overvalued unicorns.