AI-Native Software: The Next Evolution Beyond SaaS

Like many of you, I've been watching the AI space evolve at breakneck speed. At Seguin Ventures, we're convinced that AI-native software companies aren't just the next shiny object – they represent a fundamental shift in how software delivers value. Let me break this down.

What's Actually Happening Here

SaaS changed everything by moving software to the cloud. But AI-native is different. These aren't just SaaS products with an AI feature bolted on. They're ground-up reimaginings of what software can do.

The funding numbers tell the story. Throughout 2024, AI startups raised over $45B globally, nearly doubling 2023's investment levels. Companies like Anthropic and Adept aren't just getting attention – they're getting unprecedented resources to build something fundamentally new.

Why AI-Native Isn't Just "SaaS with AI Features"

Here's what makes AI-native fundamentally different:

1. It gets better automatically. Traditional SaaS is static between releases. AI-native improves with every interaction.

2. You tell it what to do, not how to do it. With SaaS, you navigate menus and learn commands. With AI-native, you express intent and the software figures out the rest.

3. It remembers. Unlike traditional software that treats each session as new, AI-native tools build context over time.

4. It expands without waiting for product updates. AI-native tools can tackle new tasks without engineers explicitly coding those capabilities.

I've seen this play out repeatedly in our portfolio companies. The difference isn't incremental – it's transformational.

Early Signs of What Works

We're seeing real traction with AI-native companies, including several in our own portfolio:

• Kick.co is providing "self-driving bookkeeping", with accounting software that does the work for you.

• Maneva.ai demonstrates how AI-native approaches can transform the workplace. Maneva helps manufacturers boost their workforce with Maneva, a smart AI assistant that automates important factory tasks, reducing downtime and improving efficiency.

• TopicFlow.com enables managers with AI to drive performance and development in the flow of work. Leverage AI to run rapid performance and compensation cycles to close the loop.

Beyond our portfolio, companies like Jasper.ai in content creation, Harvey in legal, Agency.ai in customer success, and Glean.ai in enterprise search are proving that AI-native approaches solve problems traditional software simply couldn't address.

The pattern is clear: when AI is in the foundation rather than added as a feature, the possibilities expand dramatically.

Will AI-Native Replace SaaS? Here's My Partner Alex Tong and I's Take

Let's be practical. Not every piece of software needs to be AI-native. But we're tracking three likely scenarios:

1. Parallel tracks: Many traditional SaaS applications will continue to serve specific needs while AI-native handles more dynamic work.

2. Existing players adapt: SaaS companies that successfully incorporate AI capabilities will blur the boundaries.

3. Complete disruption in certain categories: Any software primarily handling unstructured data, content creation, or knowledge work is vulnerable to complete replacement.

This isn't theoretical – we're already seeing category leaders getting unseated by AI-native alternatives that deliver 10x improvements.

Where We're Placing Our Bets

At Seguin Ventures, we're looking for AI-native companies with:

• Real data advantages – Not just access to LLMs, but proprietary data that creates sustainable differentiation

• Clear economic impact – Solutions that deliver measurable ROI quickly

• Domain expertise – Teams that deeply understand the industries they're transforming

• Enterprise readiness – Security, compliance, and integration can't be afterthoughts

The Bottom Line

The shift to AI-native isn't just another tech cycle – it's a fundamental rethinking of what software can do and how it creates value. For founders, this represents the biggest opportunity I've seen in my career. For enterprises, the companies that move quickly to adopt AI-native tools will gain significant advantages.

The most successful companies won't just add AI features to existing products – they'll reimagine their entire approach to solving customer problems.

At Seguin Ventures, we back founders building AI-native software that transforms how businesses operate. If you're working on something in this space, let's talk.