The Dupe Unicorn: The Rise Of Lean, AI-Powered Startups
Wayne Liu is the Chief Growth Officer and President of Perfect Corp America.
Venture capital has entered a new era of constraint. According to EY, a $40 billion AI transaction helped prop up venture capital numbers, but without it, funding would have seen a steep 36% drop—and the overall volume of deals continues to shrink. Megadeals like this are now the exception, not the norm.
Yet amid this pullback, one sector continues to surge: artificial intelligence. AI-related startups accounted for 33% of all VC activity in 2024 and show no signs of slowing. The unicorn model may be fading, but something smarter is rising in its place.
According to Crunchbase, IPO activity has flatlined, with hundreds of companies still in the pipeline; many from the unicorn class of 2021 and 2022 are stuck without an exit in sight. At the same time, traditional venture capital is morphing into something more conservative. As Bloomberg recently reported, firms like Lightspeed are shifting away from the classic VC model, increasingly behaving like private equity players focused on capital efficiency and profitability.
In this environment, the billion-dollar unicorn model, the holy grail of startup success for decades, no longer feels viable for many founders. The good news? There seems to be something new taking its place.
From the wreckage of the old growth-at-all-costs model, a new breed of startup is emerging: lean, AI-powered and profitable, which is what I refer to as the LAP model. These founders aren't scaling head count or chasing inflated valuations. Instead, they're building lean businesses with small teams, using open-source large language models (LLMs) and AI tools to automate tasks ranging from customer service and content creation to coding and strategic decision-making. In some cases, they're even replacing expensive consultants with AI agents that can perform real-time market analysis or draft legal documents.
Recent research shows that AI startups are achieving revenue growth at a pace that significantly outpaces traditional tech companies. Their ability to reach customers faster, automate internal processes and scale with minimal human overhead gives them a notable advantage, especially in a market where efficient monetization has become a survival skill.
I call these startups "dupe unicorns." Much like the consumer trend where savvy shoppers seek affordable "dupes" of premium products, today's smartest founders are creating companies that deliver the value of unicorns without the overhead. They may not have massive valuations but offer real utility, faster execution and sustainable business models.
In beauty and fashion culture, a "dupe" (short for duplicate) is a lower-cost alternative to a high-end product that offers similar benefits. Crucially, a dupe is not a counterfeit; it doesn't pretend to be the original or infringe on intellectual property. Instead, it's a smart substitute: an independent product that delivers comparable results, often at a fraction of the price. On platforms like TikTok, dupe culture is a celebration of value, discovery and democratized access.
Apply that to startups, and the metaphor becomes powerful. A dupe unicorn isn't a knockoff of a legacy tech giant. It's a next-gen business that mimics unicorns' performance, innovation and market traction but with leaner resources, smarter automation and sharper focus.
I've seen this shift firsthand through my work advising university accelerators and incubators. Founders today aren't waiting for large teams or fundraising milestones. One founder built an AI-powered video analytics system for sports, helping coaches with limited staff make better decisions. His tool rivals those used by elite organizations at a fraction of the cost. Another, frustrated by traditional market research, launched a generative AI search engine using open-source models, making real-time consumer insights as intuitive as a Google search.
A gamer trained a translation engine for cross-border multiplayer sessions, optimized for speed and slang. A marketer developed an AI content generation tool to produce campaign materials, social posts and email copy all from one interface, bypassing costly agencies.
It's a new kind of builder mindset: practical, fast-moving and unburdened by the myths of needing massive teams or massive rounds to make an impact.
Having helped build my company from seed stage to IPO over nine years, I've lived through the unicorn arc. I know the exhilaration of hypergrowth and its weight. That perspective has sharpened my appreciation for what these new AI-native startups are doing. Here's what I believe founders should embrace now:
1. Design AI-inclusive models from day one. Use AI not just to optimize, but to reimagine your business's foundation. Ask yourself: What can be automated, personalized or accelerated from day one?
2. Run lean with intentionality. It's not about avoiding people; it's about sequencing. Use AI to build early momentum and add team members when human creativity, trust or judgment are truly needed.
3. Speak to the new consumer journey. Gen Z and Gen Alpha founders already get this. The customer journey is no longer a funnel; it's dynamic, nonlinear, shaped by TikTok trends, AI recommendations and immersive technologies like AR glasses. Your go-to-market strategy needs to flow with that reality, not fight it.
4. Prototype, learn, repeat. Founders can now test a new idea, build a landing page, generate content and gather user feedback all within a weekend. Use that velocity to your advantage.
5. Prioritize profitability without compromising vision. Capital efficiency is a competitive advantage. Let profitability guide your build decisions. A good business model should sustain you, not distract you.
The unicorn isn't dead but evolving. In today's climate, founders don't need a million-dollar funding and a 30-person team to build a game-changing company. Sometimes, all it takes is a strong idea, a solid AI stack and a sharp understanding of your customer's real need.
The dupe unicorn is not a compromise. It's a smarter model for a smarter age, rooted in innovation and built to last. In the age of capital discipline, the LAP model, lean, AI-powered, and profitable, may well become the blueprint for the next generation of breakout startups.
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