The Role of GenAI Startups in Reshaping Business Consulting

Abstract

This study examines how GenAI-native startups enter and position themselves in knowledge-intensive professional services and how their emergence reconfigures disruption dynamics. It adopts a qualitative-dominant multi-method design combining a dataset of 177 consulting-oriented GenAI startups with three semi-structured key-informant interviews. Three patterns emerge. First, startup formation accelerates after foundation models become widely accessible through APIs and cloud infrastructure, suggesting that GenAI operates as enabling infrastructure for a category of entrants rather than as a proprietary innovation owned by individual firms. Second, the evidence does not indicate displacement of incumbents. Startups occupy an intermediate position between consultancies and generalist AI providers, differentiating through domain expertise and deployment-ready applications while depending on upstream model suppliers that are also latent competitors. Third, the three cases combine recurring software revenues with enterprise agreements and usage-dependent infrastructure costs, producing heterogeneous commercial responses, including performance-based pricing in one case. The study qualifies Big Bang Disruption for knowledge-intensive professional services: its supply-side conditions hold, whereas near-zero marginal costs and immediate adoption do not. It also specifies the properties and boundary conditions of a triadic competitive configuration. The findings inform startup positioning above the model layer, coopetitive incumbent responses, and investment in a capital-concentrated market.