The startup world loves a shiny new idea. Every year brings a new wave of “next big things” promising to reshape markets, redefine industries and help founders scale at record speed. Every year, we hear stories of “revolutionary strategies”.
But, as 2025 has shown, hype can also be expensive.
Behind impressive demos and viral pitch-deck buzzwords, many highly publicised trends are draining budgets faster than they generate revenue.
Business expert Yassin Aberaa, Founder and CEO of Social Market Way, has seen this cycle play out repeatedly, and his view is clear: “Founders are pouring money into technologies that look impressive in demos but fail basic business viability tests. The gap between hype and actual market demand has never been wider.”
As startups head into 2026, Aberaa highlights the most overhyped trends of 2025 and why they’re costing founders serious money rather than delivering meaningful growth.
AI Agents for Every Use Case?
The idea of autonomous AI agents that can plan, act and solve complex tasks has dominated the tech narrative this year. Countless teams have rushed to build agents for customer support, logistics, research, recruitment and dozens of niche use cases. However, the reality is far less transformative than the promise – unsurprisingly so, for many experts who predicted this.
According to an MIT report, 95% of AI pilots fail, often because the solutions simply don’t meet real customer needs. Development costs, infrastructure overheads, training cycles and repeated model iterations quickly turn into six- or seven-figure expenses with little to no revenue to justify them.
Aberaa says startups are discovering that many problems AI agents aim to “solve” already have cheaper, easier alternatives. “Companies are spending significant capital developing AI agents that tackle issues customers don’t actually have, or that existing tools solve more effectively,” he explains.
The result is impressive prototypes, disappointing adoption and a fast-shrinking runway. Nevermind high expenses.
Generative AI Video Platforms
The hype surrounding generative video skyrocketed after tools like Sora captured the public imagination. But, the startups building in this space are now hitting the harsh reality of economics.
GPU costs reach into the millions, models require constant retraining, and licensing disputes with creators add a growing legal layer. Meanwhile, paying customers remain scarce. Research shows that 42% of AI startup failures in 2025 were due to insufficient market demand – and video generation companies fit this pattern precisely.
“These startups are technology-first rather than business-first,” Aberaa notes. “They’re focused on what’s technically possible instead of what customers will pay for at a sustainable price point.”
It’s a familiar story of breathtaking demos but brutal margins.
Digital Humans Vs. AI Influencers
Virtual avatars and AI-generated influencers surged in popularity when they first appeared online, backed by futuristic marketing promises and major brand experiments. But by 2025, the novelty has worn off.
Production costs remain high due to animation pipelines and continuous retraining. Worse, the commercial returns have collapsed. Brand partnerships with AI social accounts are down 30% compared to 2024, according to Business Insider.
Most importantly, perhaps, audiences have made their preference clear – they want real creators, not algorithmic personalities.
“Brands experimented with AI influencers because they seemed like the future,” Aberaa explains. “But the data showed weak engagement and poor ROI, so budgets shifted back to real humans.”
Startups in this sector are now left with expensive technology and dwindling demand.
Corporate Metaverse and VR Workspaces
The vision of virtual offices and fully immersive collaboration platforms may be captivating, but businesses are simply not adopting them. Despite new XR hardware launches and heavy marketing campaigns, the workplace metaverse has struggled to convert interest into real usage.
The global XR and spatial computing market in 2025 is valued at US$20.4 billion, a figure that sounds impressive until you compare it to total enterprise IT spending. In reality, however, it represents marginal uptake, not a mainstream shift.
“Companies tried VR meetings during the pandemic and mostly abandoned them,” Aberaa says. Startups betting on a revived corporate metaverse are discovering that enthusiasm doesn’t equal revenue, and flashy demos don’t translate to long-term contracts.
Subscription Hardware Models
Subscription hardware was touted as the perfect blend of SaaS predictability and high-tech consumer devices. The reality is that it combines the hardest parts of both business models.
From smart fitness equipment to AI-powered wearables, these startups face thin hardware margins, high customer acquisition costs and churn rates that ruin lifetime value. According to a 2025 survey, only a small fraction of AI and hardware startups are profitable, with most burning through cash.
“You’re combining two difficult business models and hoping they magically work better together,” Aberaa explains. “In practice, you get the worst of both worlds: manufacturing headaches plus subscription churn.”
The Common Thread? Hype Over Fundamentals
Across all these trends, Aberaa sees the same mistake: founders chasing headlines instead of building sustainable businesses.
“They see competitors raising money for flashy technology and feel pressure to jump on the same bandwagon,” he says. “But that’s exactly how you end up burning capital with nothing to show for it.”
His advice for 2026 is refreshingly simple:
- Prioritise real customer demand
- Validate unit economics early
- Avoid trends that rely on scale to become viable
- Focus on profitability before novelty
“The smartest founders I know are the ones saying no to trends,” Aberaa adds. “Real growth comes from solving real problems, not following hype cycles.”
