As of Q1 2026, SaaS multiples are near 2009 lows. Some AI valuations are approaching 1999 highs. We believe the market is pricing labels, not fundamentals.

In the agentic enterprise era, value will accrue to those who fit into the evolving structure of work. The field of contenders remains wide open across many categories.

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AI-native startups bring higher product velocity, AI-first architectures, and comfort operating in ambiguity. Many are scaling quickly, often starting with individual-level adoption or focused point solutions. The journey toward agents embedded across enterprise workflows at scale is still early, with significant upside ahead.

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Incumbent systems of record, however, already sit inside critical workflows. They own the data exhaust and have years of buyer trust. With AI-assisted development, the marginal cost of building features is declining rapidly. But enterprise scale is not driven by code alone. It comes from process embedment, product fit, reliability, and accountability. These are strengths incumbents already possess, though many will need to reset product, process, organizational design, and business models to compete effectively in an AI-driven market.

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Where value accrues will depend, in part, on category structure.

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AI-native companies tend to have an advantage where:
→ Workflows are messy and human-intensive
→ Verticals and use cases remain under-digitized
→ Data access is more open and API-driven
→ New business models can emerge
→ ROI from AI is clear and immediate

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Incumbents are advantaged where:
→ Purchasing is centralized
→ Datasets are proprietary
→ Integration graphs are dense
→ Use cases are high consequence

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For SaaS incumbents, self-cannibalization may become a necessary path forward. Some will stagnate or consolidate. Others will successfully reinvent and emerge stronger.

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From an early-stage perspective, much of the current innovation is being driven by AI-native companies. At the same time, it is critical not to underestimate the system of record. These platforms will adapt aggressively, through product evolution, acquisitions, bundling, and pricing strategies, to compete for the agentic opportunity.

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Over time, the distinction between “SaaS” and “AI-native” is likely to blur.

The long-term winners in enterprise AI will combine elements of both. They will function as agentic systems of record, intelligence, and action, built with the operational depth of incumbents and the speed of startups. Execution at the company level will matter far more than labels or categories.

The defining companies of this cycle will be those that make the SaaS vs. AI-native distinction irrelevant.