From an investment standpoint, 2025 hasn't just been "another year of AI." It has been the year the software economy underwent a regime shift.
The barrier to entry for creating functional software has collapsed. The marginal cost of producing tools is trending toward zero. Development time has gone from months to hours. This breaks the economic model of a huge portion of SaaS.
Who Loses Every SaaS loses whose "product" is: • dashboards • forms • workflows • rules • integrations • generic automation
Because today any company can build that in-house in days or hours, using agents and foundational models. It is not a competition problem. It is a problem of economic irrelevance. If code is your moat, you no longer have a moat.
Who Wins The structural layers win: • compute • foundational models • infrastructure • security • identity • observability • compliance • data • agent platforms
They are the "oil & gas" of the new software economy. And new companies are emerging that don’t sell licenses, but rather productivity: they design workflows, deploy agents, and build living internal systems.
What We Are Seeing Inside the Fund We aren't talking theory. At Next Tier, we built our own "Internal Operating System" with AI and stopped paying for multiple SaaS products, replacing them with our own tools: • automatic deal scoring • inbound triaging • agentic dealsourcing • real-time market intelligence • proprietary data rooms and reporting • living LP and portfolio dashboards
Faster. Cheaper. More control. And we are starting to see this pattern repeat itself in other companies.
The New Thesis Software is no longer the product. The product is workflow control, data, and speed. 2026 is not going to be the year of the new generation of SaaS. It is going to be the year of the reconfiguration of the software market.
A portion of SaaS won't disappear due to bad execution. It will disappear because their economic model no longer makes sense.