When in early February Anthropic, an artificial-intelligence company, released tools to support its agent, Claude, many listed tech companies saw their stock prices plunge. The type of features now possible using a subscription to a genAI model can do much of the work previously handled by Software-as-a-Service companies.
This sparked plenty of debate about the viability of software businesses, but what about the Silicon Valley firms that finance them: the venture capitalists? SaaS companies make up on average 40 to 60 percent of VC portfolios. And many fintech or regtech companies rely on similar SaaS models to provide legal, analytical, and customer-relationship tasks.
Ray Wyand is CEO and co-founder of Verified Metrics, a startup that provides valuation and financial due diligence services to VC firms. He was also co-founder of gini, an open-banking fintech, and a global credit trader at Citibank.
Timecodes
0:00 - The “SaaSpocalypse”, genAI’s impact on SaaS companies – the biggest component of VC portfolios – and how it’s fracturing the VC industry
6:30 - Within SaaS, what makes a company a commodity, or an amplifier of AI? How does this distinction impact VC portfolio valuations?
9:00 - What does this mean for ‘domain expertise’ and is it still a competitive moat for tech companies?
11:11 - Are VCs starting to value companies that can assume liabilities as a competitive advantage?
13:24 - What’s still working for the majority of VCs who aren’t early investors in AI labs; differentiating the US market versus the rest of the world
16:54 - Why founders in Southeast Asia and other small markets are struggling, and the need for startups to build for a global marketplace, ie the Israel model
21:27 - Fintech and trying to globalize when regulation and licensing are local
23:19 - outlook for VC portfolio valuations in the new reality of AI
25:00 - Implications for how the VC industry is organized, how funds are structured; comparisons to how public fund managers operate, and blurring lines among PE, private credit, and public funds
33:17 - Can the AI labs’ revenues catch up with their debt loads? Why to be optimistic about founders and VCs even if there’s an AI stock-market crash - “magic just sometimes happens”
