Co-Founder/Managing Partner, Volition Capital. Journaling general business thoughts so I don't forget them. Christian. Harvard. Several private/public boards.
Boston, MA
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There’s a perspective in here worth deliberating on for all pre-AI B2B SaaS companies.
How the ultimate AI tech stack plays out is TBD, but what it won’t be is launching agents from each pre-AI SaaS application. That’s for sure…
So almost every pre-AI B2B product we use has told us they are raising prices for agent access.
Salesforce and HubSpot are two of the latest, albeit differently (the price increases at HubSpot seem to be mainly for their own agents, while Saleforce is increasing prices for third party agents). But it’s not just them. Another niche CRM we’ve used for 5+ years just told us we have to pay extra for agent use of API. Another niche product we use just deprecated the API we were using for 10K.
Maybe the only apps not doing this … are the ones that started agentic.
What I worry is the vendors aren’t thinking this through.
The immediate reaction of our agents to agentic price increases is … How Can We Work Around Them.
Not cheat. But literally to move data off all these platforms so there is no API tax for the agents to use them.
And the humans naturally will want to stop having their agents use apps that raise steep prices to use them.
So I do worry these vendors are inadvertently creating an agentic death spiral. Usage will drop, new agents will move off the platforms as much as practical, and these API tools will lead to less usage, less stickiness, and … less of a moat.
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Livestream #13:
Tuesday, Sept 29th at Noon EST on X.
Topics:
- Your questions (please post them here)
- Reflections on raising Volition Fund VI
- Some portfolio company thoughts
- AI
- Whatever else comes to mind
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Jevons paradox in tech:
-storage
-bandwidth
-compute
-RAM
-mobile data
-cloud
-inference
basically everything…
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This was a really fun podcast with @afkehaya talking about AI. During the middle of the podcast, a massive thunderstorm jumped on the scene in the background which was a great backdrop for the topic!
Larry Cheng has seen companies hit $10 million in revenue with fewer than 10 employees in under 10 months, something he says never happened before in his 28 years investing.
@larryvc, co-founder of @volitioncapital, joins the show.
Hosted by @afkehaya 🎙️
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What application has your company vibe coded and which SaaS application (if any) did it replace?
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Seeing internally built apps more and more. I suppose you’d expect it at Lovable, but I find it even more notable when it’s a random small business or non-profit who has done the same.
Every department at @Lovable now builds its own software.
In April we had 11 internal apps our own teams had built on Lovable, by August it was more than 80.
Lovable has a real internal software ecosystem now.
The People team alone has built about 30 apps. Finance, Legal, Security, and IT have 9 between them. Our analytics app is used by 80% of the company and handles 60% of our internal data queries. Our community team runs 345 events a month on an app it built itself.
More than 80 apps in total, across seventeen departments, all built by the people who use them.
We see the same thing at our customers. The person closest to the problem builds the solution.
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“No one vibe coded away their core SaaS apps.”
Much respect for @jasonlk’s content - he’s a worthy follow. But this statement isn’t true and its lack of accuracy is accelerating.
@julia_hornstein - you should write an article about the companies that are doing this…
I think the biggest lesson is the Anthropic + OpenAI didn’t kill SaaS. Essentially no one vibe coded away their core SaaS apps.
But what they did … was steal its budget
If you enable AI + agentic workflows, you accelerated: Datadog, Snowflake + Databricks, Gitlab, Twilio, to some extent Atlassian, etc.
If you didn’t, CIOs and companies stole the SaaS budget to fund AI
Only 20% or so of AI spend is net new
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Strange but true anecdotes from the GP fundraising trail:
If you were raising a fund in Q2, a common LP question you’d get:
Is AI killing software?
If you are raising a fund in Q3, a common LP question you’d get:
Is AI killing humanity?
Wonder what Q4 will hold…
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New York Fashion Week: Advisry.
Keith Herron is a rising star in the fashion world - amazing job! #NYFW26
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In this interview with @julia_hornstein for the @theinformation article, we talked about a commonly asked question: are there really bootstrapped/capital efficient companies in tech/AI? When the capital markets are throwing money at companies, it’s easy to assume that no one bootstraps.
The reality is AI has been a boon for bootstrapping. In the last 6 months, I have seen more companies with >$10M ARR with <10 employees after being in market for <10 months than I’ve seen in my entire career. AI has led to a proliferation of bootstrapped companies because it’s so much cheaper and easier to build products.
Why do bootstrapped companies even need to raise capital then? Among traditional use cases like sales, marketing and engineering, the key driver today is compute. Compute is like oxygen for an AI native business. At some point the bottleneck to growth is compute which is often something a bootstrapped company can’t fund off their own balance sheet.
There are challenges though. It used to be that if a company got to $5M -$10M ARR, you would have pretty good visibility on fundamentals like customer retention, upsell dynamics, go-to-market efficiency, etc. Today, these companies are growing so fast to tens of millions of revenue that there’s much less information on durability despite the impressive growth. So in some sense, these businesses may be larger and growing faster than other eras, but they can feel less predictable and more volatile.
So while it’s true that AI has led to massively capitalized businesses - it has also led to substantial growth of bootstrapped companies as well. The VC community is going to go after the biggest most capitalized companies that they perceive to have the biggest absolute upside potential. While the trillion dollar companies are truly remarkable, you can run a more capital efficient business and still achieve billion of multi-billion dollar outcomes. And today, there are more emerging companies than ever following that path.
Volition Capital raised $950 million for a new fund focused on fast-growing companies that have often built substantial revenue before taking institutional capital.
Read more: thein.fo/4xvknbi
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I’m very excited to announce that Volition has raised Volition Fund VI at $950M!
We will continue to invest in high growth, capital efficient tech companies with $5M - $50M in revenue.
Huge thanks to our founders, portfolio cos, LPs and the Volition team!
@volitioncapital
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Article link: theinformation.com/newslette…
@theinformation
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Interesting: Great initiative by UNC to launch a new School of Civic Life and Leadership focused on civil discourse across disciplines, and if this article is correct, their biggest challenge is their own faculty. Probably not an uncommon dynamic at other schools as well.
The fight for free thinking at UNC: The faculty tries but fails to ruin the new School of Civic Life and Leadership.
on.wsj.com/3UiXp9o
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