Startups Are Raising at Record Valuations Again

HumanX felt like Coachella for AI. Over several days, I jumped from stage to stage to catch Al Gore, Questlove, and a lineup of AI billionaires and unicorn founders share their insights about AI startups.

I heard thoughts like, “AI revenue is 20 to 30 times more valuable than SaaS revenue” and the commonly used, “I have no idea what’s going to happen.”

Startups are raising at valuations that exceed the highs of 2021which is a year venture capital typically looks back on as a bubble. The consensus from investors and founders, however, is that the upside is once in a lifetime. Here’s what founders need to know.

SaaS is a dirty word. Find a new business model.

“If you’re a founder looking for a Series A, I hope you’re not a SaaS company,” said Jai Das, President, partner and co-founder of Sapphire Ventures. “SaaS is a dirty four-letter word. Founders must figure out a business model that is priced on value.”

The mantra: there’s billions in software, but trillions in salaries. Investors want to see founders move beyond traditional seat-based SaaS to explore monetization like usage-based pricing, outcome-based models, or something entirely new like ad-supported AI. In addition, founders are starting to report on new metrics that better reflect the health of an AI startup like token costs as a profit and loss item and usage-based run rates.

The message to founders is that if you have existing SaaS revenue, be willing to cannibalize it to pursue a bigger market with agents.

The interface of the future is agents, not web apps.

Software engineers are running 10 agents in parallel, generating code to compress projects from weeks to days. Coding is the proof point for a recurring theme across stages — that every piece of software will be an agent, not a web app interface.