Unicorns are in decline in the US venture capital ecosystem, affected by the high interest rates that have spread around the world following the pandemic. In the natural selection process of the species, only a few thrive, driven by artificial intelligence (AI).
A survey by the consulting firm Pitchbook indicates that nearly a quarter of startups valued at over US$1 billion will have lost their "horns" by 2025, since their last investment round.
The study found that 222 of the 857 unicorns likely saw their market value fall below $1 billion, based on both publicly available information and internal assessments.
The assessment is that many unicorns emerged during years of abundant liquidity , driving valuations to historically high levels. With changing macroeconomic conditions, several companies were unable to maintain that status.
“Macroeconomic conditions have changed substantially, with higher interest rates and a prolonged stalemate in the investment sector, fundamentally altering valuations. As a result, startups that last raised funds in 2021 and 2022 are trading at an average discount of 68.2% and 52.1%, respectively, in 2025,” says the Pitchbook study.
According to the survey, many startups from their heyday that have not raised capital recently show a greater discrepancy between their last valuation and their performance, reflecting outdated assessments.
The situation is different for those who raised capital in 2023, who have fared better, although they are not immune to markdowns , valuations below the last round. "Startups that completed their last funding round in 2023 are being traded at an average discount of 19.4% in 2025," the study points out.
Despite the "culling" of several companies, the American unicorn breed is growing in terms of valuation. The survey shows that, by the end of 2025, the group will have a combined value of US$4.7 trillion, based on the post-investment valuations of each company. This represents a 56.6% increase compared to 2024.
Unlike during the pandemic, a few names are driving valuation : the ten largest companies accounted for 51.8% of the value in 2025, compared to 18.5% in 2022.
"In practice, the venture capital market now operates as two distinct ecosystems; while the biggest names raise frequent rounds with rapidly rising valuations, a substantial portion of the market struggles to raise new capital," states an excerpt from the Pitchbook report.
The study points out that AI has been one of the main factors in this concentration, with investors seeking exposure to the winners of the technological race. But while AI strengthens unicorns, it can also weaken them if it fails to deliver the promised gains .
"If AI generates widespread productivity gains and lasting economic value, this concentration may be justified. Otherwise, there is a risk of over-allocation of resources and amplified losses," the study points out.
