Every few years, market analysts and pundits invents a new buzzword. A way to explain – cleanly, dramatically, and from a safe distance – why a bunch of “can’t miss” companies suddenly look very missable.
Lately, a word getting passed around investor circles is “SaaSpocalypse”: tighter money, weaker demand, and the looming fear that AI will eat entire product categories. But here’s the more annoying truth: AI isn’t the meteor killing the SAAS dinosaurs. AI is the weather.
What is happening is bad fundamentals colliding with a capital environment that no longer subsidizes bad decisions. Lots of Software as a service companies are falling back to earth… And some will end up six feet under.
If you want a clean example of “gravity returning,” look at ZoomInfo (a former employer of mine). ZoomInfo hit an all-time high closing price of $77.35 on November 17, 2021, per Macrotrends. Since then, the stock spent long stretches dramatically below that peak (today’s price is $6.84. 90% off).
That kind of decline isn’t just about one company. It’s a symptom of a broader reset: The market stopped paying a premium for “growth at all costs.” The bar moved. And a lot of SaaS companies didn’t.
Meanwhile, the funding machine that kept the whole party loud is… quieter. PitchBook/NVCA’s Q4 2024 Venture Monitor spells it out: fundraising in 2024 and 2025 was slow, with $76.1B raised across 508 VC funds, and the report notes a liquidity squeeze.
So if your company’s model depended on “we’ll just raise more money again,” You better hope that your VC likes the cut of your gib.
Where AI does matter (just not the way people think)
AI absolutely changes the game—but mostly by doing one thing extremely well: It removes the excuse for mediocre software.
AI will compress entire categories where the “product” was really just a workflow wrapper, a dashboard, and a user permissions system. When a user can ask for the outcome directly, and get it… some SaaS products start to look like fax machines with nicer typography.
That’s why you see “SaaSpocalypse” framed as commoditization: the idea that software becomes cheaper, easier to replicate, and harder to differentiate.
But again: AI doesn’t kill healthy companies. It kills companies that were already fragile.
How to survive: leadership plus fundamentals
Here’s my prediction: The next wave won’t separate “AI companies” from “non-AI companies.” It will separate companies that are run well from companies that were funded well.
When money was cheap, lots of leadership teams could confuse momentum with strategy. You could paper over churn with spend. You could patch retention with discounts. You could call a feature backlog a “roadmap” as long as the deck looked good and the growth line slanted up.
Now? The market is forcing a different standard:
- Differentiation
- Repeatable go-to-market strategies
- Retention that doesn’t require bribery or discounts
- A real narrative for why you exist in a world where AI is table stakes
PitchBook/NVCA even points to the traits that have mattered for recent public-market openings: scale, profitability, and durability of growth. That’s the playbook now.
I’m not here to drag specific companies—especially ones I know are full of smart people doing real work. But the broader pattern is real: when markets tighten, companies restructure. Another former employer, NextRoll, had widely reported layoffs during the early pandemic period, and later additional cuts in 2022.
Whether you’re public or private, the theme is the same: when the margin for error shrinks, the org chart becomes the first battleground.
What happens next
Here’s what I think the next 12–24 months will look like:
- More consolidation.
Stronger platforms absorb point solutions. Acquisitions rise. - SaaS pricing models get remixed.
Seat-based pricing gets pressured as AI automates work that used to justify seats. Expect more usage-based and outcome-based experiments (and a lot of messy transition). - AI becomes a feature, then an expectation… then invisible.
The winners won’t be the ones who scream “AI-first.” They’ll be the ones who make the customer say, “Wait—how did this ever take that long?” - The bubble pops unevenly.
Some companies will fail loudly. Many more will fade quietly: flat growth, rising churn, shrinking TAM, and “maintenance mode” masquerading as strategy.
If you run a SaaS company, here’s the uncomfortable checklist
If you want to know whether you’re wheat or chaff, ask yourself:
- If a competitor shipped an AI copilot next week, would your differentiation still exist?
- Do customers renew because they love you—or because it’s painful to leave?
- Does your leadership team tell the truth about churn?
- Are you building a product—or defending a revenue model?
Because the “SaaSpocalypse” isn’t a sudden disaster. It’s the end of an era where money made average companies look invincible.
AI didn’t cause that. AI just turned the lights on so everyone can see it.