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Zombie Unicorns, Trade Wars & the End of Startup Delusion
Silicon Valley is facing a reckoning as over 1,200 “unicorns” sit on inflated valuations with no path to exit. Are we finally waking up from the startup fantasy—or just entering the zombie era?
Vasily Alekseenko
May 21, 2025
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Zombie Unicorns, Trade Wars & the End of Startup Delusion
Why Silicon Valley’s reckoning might be the best thing that ever happened to startups.
Right now, there are over 1,200 unicorn startups globally—companies valued at over $1 billion. But here’s the kicker: most of them have no plans to go public or get acquired. They’re not scaling toward a big exit. They’re just sitting on giant valuations with no obvious path forward.
Welcome to the zombie unicorn era.
As Bloomberg’s Katie Roof put it in her recent piece, “The Unicorns Are Zombies,” these are companies “too big to sell, too broken to IPO.” They look alive, but they’re not really going anywhere.
And while this might sound like a Silicon Valley-specific issue, it’s not. It’s a cautionary tale for founders everywhere.
In 2020, 354 startups hit unicorn status in the U.S. Alone. Only six went public that same year. That’s less than 2%. And according to Bloomberg, many of today’s unicorns haven’t raised in over two years. Their valuations are frozen in time—outdated, overinflated, and quietly decaying.
Worse? Many of them have been living off the fumes of 2021’s capital boom. But that runway is running out.
How did we get here?
For years, startups were rewarded for prioritizing growth over everything else. Profitability was optional. Retention was ignored. All that mattered was top-line expansion and the next fundraise.
It got so wild that, as Bloomberg noted, OpenAI’s co-founder raised $1 billion before having a concrete product. That wasn’t an outlier—it was a symbol of an era fueled by cheap capital and blind optimism.
But now? That party’s over.
Enter: trade wars, interest rate hikes, and market corrections.
Trump’s ongoing tariffs and the U.S.-China trade war have hit global tech hard. Klarna and StubHub paused their IPOs in part due to economic instability. And while it seems like bad news on the surface, it might be exactly what the industry needs.
Because with less access to public markets and fewer mega-acquisitions, founders are being forced to confront something many have ignored:
Can we actually build a sustainable business?
This shift isn’t just theoretical. Late-stage capital is drying up. According to Crunchbase, global VC investment in Q1 2024 was down more than 50% from its peak. Many late-stage unicorns now face brutal down rounds—or worse, no funding at all.
And when you peel back the numbers, the signs are everywhere:
Dozens of unicorns haven’t updated their valuation since 2021.
Some are burning $50–100 million per year, with no clear path to breakeven.
Investors are pushing for “clean exits” or flat secondaries—just to get something back.
And in the shadows of all this?
Early-stage founders, watching it all, wondering what it means for them.
Here’s the uncomfortable truth:
If your business only survives by constantly raising more capital, it may not be a business. It might be a financial illusion.
And maybe that’s okay.
Because this correction—painful as it is—is necessary. For too long, we’ve mistaken growth for success, hype for value, and unicorn status for business maturity.
But now we get a reset. And in that reset, the winners won’t be the ones with the flashiest decks or the highest valuations. They’ll be the ones who survive. The ones with real products, real customers, and real business models.
So maybe it’s time we stop chasing unicorns.
And start building thoroughbreds instead—resilient companies that don’t just run fast, but run long.
Because those are the ones that will define the next decade of entrepreneurship.
It’s time for a POLL (you can also login and leave a comment):
Are we finally done pretending?More than 1,200 unicorns have no exit plans. Many haven’t raised in years. Some are still burning $100M a year. We called them “innovators.” Turns out, a lot were just well-funded illusions. |
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Vasily Alekseenko
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@ Rare Founders
Rare Founders - building the bridge between founders and investors via regular in-person and online events, meetups, conferences.
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