Author: Paul Morrissey

Over the past few months, I have been asked the same provocative question again and again: “Will Agentic AI be the nail in the coffin for SaaS?” It’s a good question. But I think it’s the wrong one.

The real question is this: Will Agentic AI expose which SaaS companies actually own real value — and which ones were simply renting convenience in the cloud? For the past two decades SaaS has been one of the most successful business models in technology. 

Subscription revenue, predictable cash flow, scalable delivery, and strong margins made it incredibly attractive to founders and investors alike. But a large portion of SaaS value has historically been built around user interfaces, workflow routing, dashboards, form entry and seat-based licences. In other words, SaaS often organised work rather than actually doing the work.

Agentic AI changes that equation.

Agentic AI systems can plan, execute and manage multi-step workflows autonomously. Instead of humans navigating multiple software tools, AI agents can increasingly complete the task themselves — resolving support tickets, updating CRM records, generating reports, reconciling invoices, or coordinating procurement processes. In short, the interface layer that defined much of SaaS may no longer be the Centre of gravity. That doesn’t mean SaaS disappears. But it does mean the economic model behind many SaaS companies is now under scrutiny.

The companies that survive this shift will not be those that simply provide software. They will be those that control data, own critical workflows, operate in trusted domains, and can price based on outcomes rather than user seats. This is not the death of software. It is the transition from SaaS 1.0 to something much more autonomous.

The Venture Capital Perspective

From a venture capital perspective, software investment is not slowing down — but the type of software being funded is changing rapidly. AI companies accounted for the majority of venture capital investment in 2025, with roughly 61% of global VC funding going into AI-related companies [1]. Enterprise adoption is also accelerating quickly. One report found that 76% of enterprise AI deployments were purchased solutions rather than internally built systems [2]. In other words, investors are still enthusiastic about software businesses. They are simply shifting their capital toward AI-native platforms, vertical AI applications and agent-enabled workflow systems.

What venture capitalists are becoming more cautious about is traditional SaaS that sits in the middle of a workflow but does not own the underlying data, decision logic, or automation layer. If an AI agent can orchestrate work across multiple tools, the value of those tools changes dramatically. The key question VCs now ask founders is simple: Why will your software still matter when AI agents can do the work themselves?

Private Equity’s View

Private equity investors are approaching the issue with characteristic pragmatism. Technology remains one of the most active sectors for private equity investment. Tech deals represented around 22% of North American private equity transactions in early 2025, and funds still hold hundreds of billions in undeployed capital targeting technology assets [3]. But the classic private equity SaaS playbook is under pressure. For years, PE firms could acquire a promising SaaS company, rely on rapid market expansion, increase revenue growth, and benefit from multiple expansion. Historically, the majority of value creation in technology buyouts came from revenue growth and valuation increases rather than operational improvements [3].

Today that strategy looks more fragile. Higher interest rates, slower SaaS growth curves, and the disruptive potential of AI are forcing PE firms to become more selective. They are increasingly focused on companies that can use AI to improve margins, automate operations, and deepen product differentiation. In other words, private equity is not abandoning SaaS. It is simply demanding that SaaS businesses evolve into AI-enabled platforms with durable competitive advantages.

The Family Office Perspective

Family offices provide a particularly interesting perspective because their investment horizons are often longer and their capital structures more flexible. Most family offices already have some exposure to artificial intelligence. One report suggested that around 86% of family offices now have AI exposure, primarily through public market investments [4]. At the same time, around 65% intend to increase their focus on AI-related investments in the coming years [5].

However, family offices are also becoming more cautious about valuations and private market liquidity. Despite this caution, both AI and SaaS continue to attract significant family office capital. In fact, venture deal values involving family offices more than doubled for both AI/ML and SaaS companies between 2023 and 2025, even though the total number of deals declined [6]. What this tells us is that family offices are concentrating capital into fewer, higher-quality opportunities rather than retreating from the sector entirely.

They are asking the same question as other investors: Does this software business still matter in a world where intelligent agents are everywhere?

My Conclusion

So, will Agentic AI be the nail in the coffin for SaaS? For weak SaaS businesses, possibly yes. Companies with shallow product differentiation, limited data advantages and purely seat-based pricing models may find their value proposition eroded as automation expands. But for strong software companies, Agentic AI is not a coffin — it is a catalyst. It pushes the industry toward outcome-based software, deeper automation, and products that sit closer to real economic activity rather than simply organizing information. The companies that win in the next decade will not be those that simply manage workflows. They will be the ones whose systems actually perform the work, control the data, and deliver measurable outcomes.

Serious investors are not turning away from software. They are simply becoming less tolerant of SaaS businesses that cannot explain why they will still matter in an AI-native world. And that may ultimately be the healthiest thing that could happen to the software industry.

References

[1] OECD – Venture Capital Investments in Artificial Intelligence Through 2025

[2] Menlo Ventures – State of Generative AI in the Enterprise Report

[3] Bain & Company – Global Technology Report 2025

[4] Goldman Sachs – Family Office Investment Insights Report

[5] J.P. Morgan – Global Family Office Report 2026

[6] PwC – Global Family Office Deals Study 2025

One of the most interesting questions I am hearing from founders at the moment is this: 

“With tools such as OpenAI, Claude and Gemini capable of generating code, debugging applications, and helping design software architecture, do start-ups still need a CTO?” Or has technology effectively become something you can treat as a flexible working resource — something you simply rent when required? 

It is a fair question, and one that reflects how profoundly the technology landscape has changed over the past two years. 

My answer is nuanced. If your idea depends on technology to demonstrate a proof of concept, build a product, or scale a platform business, then you absolutely need CTO capability somewhere in the organisation. But that does not necessarily mean you should appoint a traditional CTO on day one. 

That distinction is becoming increasingly important for founders. 

The fundamental mistake many people make in this discussion is confusing software production with technology leadership. Tools such as OpenAI, Claude and Gemini are becoming extremely capable engineering assistants. They can generate code, help structure applications, review security issues, and accelerate development cycles dramatically. 

For early-stage founders, this means something important: the journey from idea to prototype has never been shorter. With the right prompts and some disciplined thinking, founders can now get surprisingly far in building proof-of-concept systems without maintaining a large internal engineering team. 

In many cases this allows start-ups to validate their ideas faster and with far less capital than was historically required. 

But there is an important caveat. 

AI tools can help build software, but they do not provide technical judgement. They do not carry responsibility for architectural decisions. They do not worry about how a platform will behave under scale, whether the data model creates strategic value, or whether a design choice today will create catastrophic technical debt two years later. 

That is where CTO capability remains critical. 

A good CTO does not simply write code. A good CTO makes decisions about what should be built, what should never be built, how systems should be structured, how security and resilience are embedded, and how technology aligns with the business strategy of the company. 

Those are leadership responsibilities, not coding tasks. 

However, there is another dimension founders need to think carefully about — and one that is often overlooked in the excitement of early-stage building. 

Bringing in a CTO very early in a company’s life has consequences. 

First, there is the question of equity. Early technical co-founders are often granted significant ownership stakes in the company. In many cases that can mean 20–30% of the company’s equity being allocated before the business model, market validation, or funding strategy has been fully proven. If the technical capability required in the early stages could have been achieved through modern AI tools combined with outsourced engineering, founders may find they have diluted themselves far earlier than necessary. 

Second, there is the very real risk of founder conflict . A commonly cited estimate is that roughly 65% of high-potential technology startups fail primarily because of co-founder conflict according to research popularised by Harvard’s Noam Wasserman.  

Co-founder relationships are complex. When a technical co-founder joins very early, before the product direction, market focus, and organisational culture have fully formed, there is often significant potential for strategic disagreement. Differences in pace, product philosophy, funding strategy, or simply personality can become structural tensions within the business. Many start-ups fail not because the idea is wrong, but because the founding team fractures. 

Introducing that dynamic prematurely can be a risk founders should think about carefully. 

None of this means that technical leadership is unimportant. Quite the opposite. In technology-driven businesses, strong technical leadership eventually becomes essential. But the timing and structure of that leadership has become more flexible. 

In today’s environment there are several models that founders can consider. 

The first is AI-assisted prototyping combined with outsourced development. This can allow a founder to move quickly from idea to proof of concept without immediately committing to a full-time CTO or large engineering team. 

The second is the use of a fractional CTO or senior technical adviser — someone who provides architectural guidance and oversight while the product and business model are still being validated. 

The third model, of course, remains the traditional technical co-founder, but it is one that founders should enter into with clarity about long-term alignment and the implications for ownership and control. 

What has changed is not the need for technology leadership. What has changed is the economics of early-stage software development. 

AI tools have dramatically lowered the cost and speed of building early systems. They have made it possible for founders to explore ideas, test workflows, and validate customer needs without committing immediately to permanent technical leadership structures. 

But they have not eliminated the need for someone who understands the deeper implications of technology choices. 

If your business ultimately depends on scale, reliability, security, data advantage, or defensible intellectual property, then CTO-level thinking will eventually become indispensable. 

The key lesson for founders today is therefore simple. 

Do not confuse the ability to generate code with the ability to build a technology company. 

AI tools are extraordinary accelerators. They can compress months of work into days and allow small teams to produce remarkable outputs. But technology leadership — the judgement that determines how systems are designed, how they evolve, and how they support the long-term strategy of the business — remains a fundamentally human responsibility. 

So the real answer to the question is this: 

Yes, technology start-ups still need CTO capability. 

But thanks to the emergence of powerful AI development tools, founders now have far greater freedom to decide when that capability becomes permanent — and how much equity, control, and risk they are prepared to attach to that decision. 

¹A commonly cited estimate is that roughly 65% of high-potential technology startups fail primarily because of co-founder conflict or broader founding-team “people problems,” according to research popularized by Harvard’s Noam Wasserman.  

Corporate boards exist at the heart of modern governance. They sit between ownership and management, responsible for ensuring that organisations are directed and controlled in ways that create long-term value while protecting the interests of stakeholders. The board’s responsibilities include oversight of strategy, monitoring performance and risk, and ensuring accountability to shareholders, regulators and society at large. Directors are therefore not merely advisers to management; they are stewards of the enterprise and must exercise independent judgement in the interests of the organisation’s future.

In practice, this responsibility requires boards to do far more than simply endorse the views of executives. The board’s purpose is to challenge, test and refine management thinking. Good governance depends on maintaining a clear distinction between those who run the company day-to-day and those who oversee its direction. Executives manage operations, while the board provides oversight, strategic guidance and accountability, ensuring that management decisions are aligned with the long-term interests of the company and its stakeholders.

One of the most misunderstood aspects of board effectiveness is the role of disagreement. Many people unfamiliar with governance assume that a well-functioning board should be harmonious and unified. In reality the opposite is often true. Healthy disagreement is not a sign of dysfunction but of engagement. When directors bring different perspectives, experiences and expertise into the room, debate becomes a powerful tool for better decision-making. Research on boardroom dynamics shows that “vigorous dissent” around strategic issues improves decision quality and helps boards avoid groupthink.

The danger of excessive consensus is that it can allow the status quo to persist unchallenged. Organisations, particularly successful ones, can easily fall into patterns of thinking that go unquestioned over time. Boards are uniquely positioned to disrupt this complacency. Non-executive directors and chairs are deliberately placed one step removed from daily management so that they can bring independence of thought and a broader perspective. Their role is to ask difficult questions: Why are we pursuing this strategy? What risks are we overlooking? What alternative options should be considered?

Throughout my own career as a Chair and Non-Executive Director across multiple organisations, I have repeatedly seen how constructive disagreement strengthens decision-making. Boards are composed of individuals with different backgrounds, sectors of experience and personal insights. When those perspectives collide respectfully, they force deeper analysis and more robust conclusions. The best boardrooms I have been part of were not silent or overly polite; they were intellectually demanding environments where directors felt confident enough to question assumptions and challenge the executive team.

This dynamic is essential because boards carry responsibilities that extend beyond shareholders alone. Directors must consider the impact of decisions on employees, customers, suppliers, communities and other stakeholders. Modern corporate governance frameworks emphasise the duty of directors to act in good faith and in the best interests of the company while balancing the expectations of multiple stakeholder groups. Such complexity inevitably generates differing viewpoints. A strategy that benefits shareholders in the short term may carry risks for employees or long-term sustainability. Debate in the boardroom allows those competing considerations to be surfaced and evaluated properly.

The role of the Chair is particularly important in managing this process. Encouraging disagreement does not mean allowing conflict to become personal or destructive. Effective chairs create an environment where directors feel able to express opposing views while maintaining respect and trust among board members. Governance research distinguishes between “task conflict,” which focuses on differing ideas and strategies, and “relationship conflict,” which becomes personal and damaging. The challenge is to foster the former while preventing the latter.

In practice, this often means structuring discussions carefully and ensuring that every voice in the room is heard. Some directors are naturally more vocal than others, and the Chair must ensure that quieter members are invited into the debate. Diverse boards—whether in terms of professional background, gender, nationality or sector experience—tend to generate richer discussions precisely because they bring different mental models to the table. Diversity, therefore, is not only a social or ethical consideration but also a governance advantage.

Yet disagreement is only the first step. Ultimately, a board must reach decisions. One of the defining features of effective governance is the ability of directors to debate vigorously and then unite behind a collective conclusion. Once a board decision is made, it becomes the responsibility of all directors to support that outcome publicly, even if individual members initially held different views. This principle of collective responsibility ensures that management receives clear direction and that the organisation benefits from decisive leadership.

This pattern—robust debate followed by unified commitment—is one I have observed repeatedly across boards in different sectors. The discussions may be intense, the perspectives strongly held, and the analysis detailed. But when the process is conducted professionally and respectfully, the final outcome is almost always stronger than any single viewpoint brought into the room at the beginning.

In an era of increasing complexity—technological disruption, regulatory change, sustainability pressures and geopolitical uncertainty—the importance of strong board governance has never been greater. Boards must guide organisations through uncertain terrain while safeguarding long-term value and stakeholder trust. To do this effectively, they must resist the temptation of easy consensus.

The most effective boards are those where disagreement is not feared but welcomed. When directors challenge each other and the executive team with intellectual rigour, the board fulfils its true purpose: ensuring that decisions are examined from multiple perspectives and that the organisation moves forward with clarity and confidence. In that sense, disagreement in the boardroom is not a weakness. It is one of governance’s greatest strengths.