Canadian VCs are starting to fear an AI-driven “SaaSpocalypse”
Canadian venture capital investors are concerned about the potential impact of AI on the software-as-a-service (SaaS) industry, with some fearing an AI-driven 'SaaSpocalypse'. The concerns are putting pressure on Canada's VC market, which is already facing challenges such as difficulty accessing capital and lack of exits.
Canadian technology investors are worried about AI's impact on SaaS. Many public SaaS stocks are down due to fears that AI agents will make traditional software-per-seat models obsolete. Private SaaS valuations have also been affected. Investors think big changes are coming to the SaaS market as AI makes it easier for competitors and clients to build their own solutions. VC funds are under pressure to demonstrate returns. Some are selling shares at steep discounts to show distributed to paid-in capital (DPI). Others are being more selective. The current environment is challenging for Canadian VC, with difficulty accessing capital and lack of exits. LPs have grown impatient and are becoming more selective. AI has reduced hiring needs and made shipping initial products easier, but producing scalable offerings still requires human touch. There is consensus that the SaaS market is rapidly changing and may look different in six months. VCs are eyeing secondary markets as a way to demonstrate DPI.
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