AI and SaaS Valuations

Why investors are chasing AI-native growth, how it’s reshaping multiples, and what it means for the next wave of deals.

There’s been a lot of chatter lately about how hard it is to raise money if you’re not an AI company. Harry Stebbings posted recently that the old benchmark for great SaaS growth, the classic triple triple double double, doesn’t cut it anymore. You have to be growing even faster than that to get funded.

And he’s not wrong. I’ve been hearing the same thing from investors. Unless you’re an AI business or showing extreme acceleration, it’s a tough market to raise in right now.

It sounds a little crazy, but it’s also a reflection of how AI is reshaping the way investors think about SaaS multiples and company value. Dollars chase growth, and right now the biggest growth stories are all AI-shaped.

For years, SaaS was the gold standard of recurring revenue. Predictable, compounding, capital-efficient. Investors loved it. But the transformational nature of AI, along with the insane examples of growth and the ability of these companies to scale with such low headcount, just makes them absolutely pop off the charts.

So it makes sense that the market is pouring capital into that shift.

That doesn’t mean you can’t still build a massive business if you’re growing at a normal triple triple double double pace. Of course you can. If I were an investor, I’d still want to back those companies. But it does mean the trade-offs are real. Dollars get allocated where the narrative feels explosive, where there’s transformation, not just execution.

What will be really interesting is when the first true AI native company goes public. Because when that happens, it will reset the benchmarks. Public investors will start comparing those businesses to traditional SaaS companies, and money will move accordingly. You’re already seeing that in the private markets, with AI companies pulling capital and attention away from traditional software.

So I’ve been thinking a lot about how to categorize what’s actually happening. If you’re running a SaaS company today, it’s worth asking where you fit in this new hierarchy.

At the top are AI native companies. The OpenAIs, Anthropics, and a wave of startups like DualEntry, Rillet, and others that are built entirely AI first. We don’t know how they’re really trading yet since most are private, but all signs point to eye-popping valuations. It’s understandable, given their growth and the frontier ahead.

Next are companies transforming into AI businesses. These are traditional software companies that are rebuilding their products and positioning around AI. Intercom is a good example. They’ve essentially reimagined the company to be an AI first platform for customer engagement. And it’s honestly hard to think of another example of a company that’s truly done this successfully… that’s transformed their product, positioning, and revenue model into something AI first in such a short amount of time. The valuations they’ll be able to justify will depend on how truly and deeply they’re able to make those transformations.

Then come the AI advantaged companies. They may not be AI first, but AI meaningfully strengthens their core business. Think of companies like HubSpot, which has vast proprietary CRM data that can power better automation, or Zendesk, which can use its support conversations to train models and improve routing and response times. For them, AI isn’t existential, it’s additive.

And finally, the AI susceptible companies. These are the ones investors are nervous about, where AI might plausibly recreate the core value proposition. Think of marketing automation platforms like Constant Contact or Outreach, where so much of the value comes from templated campaigns and automated workflows. It’s easy to imagine AI stepping in and generating personalized campaigns on the fly, eliminating entire layers of that stack.

One of the big bets most investors are making (I think!) is that if you’re not in the first (AI native) category, there’s an opportunity to completely rebuild and rethink your market from an AI native perspective. Which means if you’re in one of the last two categories, and you’re not actively transforming into an AI business, there’s probably a startup being founded right now that’s going to do it for you. An AI native company that will rip apart your product, your go-to-market, and your entire category.