The World Economic Forum has highlighted that Artificial Intelligence is not just another venture sector but a force rewriting how companies are built, scaled and financed.
With AI-native firms reaching $100 million in annual recurring revenue in under a year and five companies alone absorbing 20 per cent of global VC funding in 2025, the WEF report warns that traditional SaaS valuation frameworks and liquidity mechanisms are becoming obsolete. The industry must adapt its capital structures, regulatory frameworks and talent ecosystems to support a new era of capital-efficient, infrastructure-heavy growth.
The VC model of the last three decades was built around software sold to human users, with the addressable market limited by the number of people performing a task.
The SaaS market grew to roughly $300 billion a year. AI changes that by automating cognitive work itself — from legal review to medical diagnostics — shifting the market beyond human-bound workflows and expanding the opportunity by an order of magnitude.
This shift is also rewriting the growth playbook. AI-native companies are scaling faster and leaner than any prior technology generation, but product-market fit is harder to defend. “When AI can replicate core product functionality in weeks, the competitive advantages that traditional SaaS companies built on unique features and customer lock-in begin to erode,” the report notes.
As a result, annual recurring revenue (ARR) is becoming an unreliable valuation metric, forcing investors to rebuild frameworks for a fundamentally different business model.
