Software, SaaS, and AI

Software has been venture's core sector for about twenty-five years because it needs little capital per dollar of revenue, scales at near-zero marginal cost, and produces recurring revenue that public markets value highly. A SaaS company can often reach $100 million of recurring revenue on $100–300 million of equity. Since late 2022, generative AI has added foundation-model laboratories and AI-native applications that grow faster but on different economics.