Software After the SaaSpocalypse: What Investors Learned in 2026

AI is sorting software companies into winners and losers while restoring value to incumbents with proprietary context, trusted workflows and regulatory expertise.

• Software revenue multiples rose from more than 10 times revenue during the pandemic to roughly 3.5 to 4 times during the sell-off, then recovered to 5 to 6 times.
• A quick AI-coded replacement can reach 70% to 80% of a company’s needs, while integration, maintenance and regulatory updates preserve the value of commercial software.
• Ideagen serves around 16,000 customers and has built an orchestration agent supported by regulatory intelligence covering 28,000 laws and regulations.
• 3E tracks 500,000 chemicals and 3,000 regulations across 200 jurisdictions, while its workflows require 99.99% accuracy; Stanford’s 2026 AI Index found that leading AI agents still fail roughly one in three reasoning attempts.
• AI revenue remains around 10% of total revenue at the leading edge, while cybersecurity, vertical and industrial software, insurance and financial-services software have recovered faster than horizontal products for small businesses.
• Private equity sponsors face refinancing pressure with the 10-year Treasury yield around 5.1%, and increasingly need strategic buyers or public-market growth to support exits.

Takeaway: Investors should favor specialized software with proprietary data, mission-critical workflows and customer trust, while assessing leverage and exit routes because AI monetization remains gradual and many owners may wait for better valuations.