As competition among AI startups increases, founders and VCs are using novel valuation mechanisms to create a perception of market dominance. Previously, companies raised multiple rounds of funding at escalating valuations, but this strategy has evolved to consolidate what would have been two separate funding cycles into one. Recent rounds employing this strategy include Aaru’s Series A, a synthetic-customer research startup, which raised a large portion of its check at a $450 million valuation, and other VCs joined at the same $1 billion price point. This strategy allows companies like Aaru to claim themselves as a unicorn, even though significant portion of the equity was acquired at a lower price. However, the strategy is not without risks, as Jack Selby, managing director at Thiel Capital and founder of Cooper Sky Capital warns founders that chasing extreme valuations is a dangerous game.