The $227M GEO/AEO Startup Bubble: Mass Extinction Event Coming?

## The Overcrowded Landscape

The GEO/AEO (Generative Engine Optimization / Answer Engine Optimization) startup ecosystem has exploded. According to Kevin Indig's research, over $227 million has been raised across 60-100 startups in this space, clustered into 9 sub-categories.

And that count is conservative — at least 15 additional companies with $5M+ funding aren't even on the tracking charts.

## Why a Mass Extinction Is Coming

### 1. Overfunded + Overcrowded

If you're in digital marketing, you've probably been pitched by at least 5 of these companies. The market simply cannot support this many players offering essentially the same service.

### 2. Low Technology Barrier

At their core, these systems:

• Get prompts from users (or generate them with AI)
• Run them through ChatGPT's API
• Measure the output for citations and brand mentions

Multiple brands report having a developer see a demo and say: "I can build that" — and then doing so in a week or less.

### 3. Race to Zero

The market is flooded with free POCs (proof of concept). One brand we spoke with was testing 3 different GEO/AEO tools for free for a year. When the product is commoditized, pricing collapses.

### 4. Actionability Problem

This is the killer. Brands and retailers consistently report the same lifecycle:

1. Initial excitement from dashboards showing "AI visibility"
2. Some improvement in citation metrics
3. Frustration at lack of actionable insights
4. Trough of disillusionment — what do we actually DO with this data?

## The AI Visibility Mirage

Here's the uncomfortable truth that many GEO/AEO vendors won't tell you:

AI Visibility is a vanity metric.

Research from SparkToro and Gumshoe demonstrated this clearly: when 600 volunteers ran the same prompts, the variety of AI responses was enormous. The "winner" in AI citations changed dramatically based on:

• User history and memory (personalization)
• Time of query (recency bias)
• LLM version (model updates)
• Session context (conversation history)

One researcher put it perfectly: "GenAI conversations are like snowflakes — insanely complex and never duplicated."

## What Still Has Value

Not everything in GEO/AEO is worthless. The genuinely useful features are:

• Crawlability improvements — ensuring AI bots can access your content
• Sentiment monitoring — understanding how AI models discuss your brand
• Brand-level PR strategy — input for public relations efforts
• And it's increasingly free — competitive pressure has driven pricing to near-zero

## Our Prediction

By Q4 2026, we expect:

• 40 -60% of current GEO/AEO startups will fail or be acquired at distressed valuations
• Major SEO platforms (Semrush, Ahrefs, Moz) will absorb the useful features as add-ons
• Survivors will pivot to deeper, more actionable products beyond visibility dashboards

Part of our Intelligence series tracking the GEO/AEO industry.