Horizon Capital: News

Is the SaaS era truly coming to an end? And how is AI enabling founders to reach technological and business validation faster than ever?

In this episode, Horizon Capital Co-founders Lior Segal and Yaniv Jacobi discuss Pre-Seed and Seed investing in a market reshaped by AI. They explore why founders are now expected to generate meaningful revenue with less initial funding, when raising venture capital may no longer be the right choice, and the types of founders Horizon would never invest in.

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It’s become a bit of a sport lately to declare that “SaaS is dead.” It’s a sharp, punchy headline that makes whoever says it sound like they’re already living in 2030. But the more people repeat it, the less accurate it gets. What we are witnessing isn’t the death of SaaS; it’s a phase shift. The form is changing, the mechanics are evolving, and pricing models are being broken and rebuilt – but the core concept of Software as a Service isn’t going anywhere. On the contrary, we are entering an era where building a larger, faster software company is easier than it was a decade ago. And that is exactly why SaaS is about to be everywhere.

Let’s start from the top. When headlines scream “SaaS is dead,” do they really mean the era of Software as a Service is over? Are they suggesting that organizations no longer consume software through a provider that maintains, secures, improves, and supports it? Not quite.

Neither AI breakthroughs – which allow anyone to build a “custom tool”- nor a regression to a world of local installations, manual upgrades, broken versions, and total dependence on internal IT teams is coming to save us. Organizational reality isn’t heading in that direction. It’s moving the opposite way: more service, more provider accountability, more automation, more integration, and higher standards. This isn’t the “end of SaaS”; it’s its maturation.

Market Uncertainty is a Repricing, Not a Collapse in Demand

The primary reason the “SaaS is dead” narrative feels credible is that markets, especially public ones, have undergone painful corrections. Valuations dropped, multiples shifted, and the narrative became “the category is over.” But a drop in multiples isn’t proof that a category has lost its utility. It simply means the market isn’t sure how to price the future.

This is where AI enters like a thick fog, raising two heavy questions: How easy will it be to commoditize features? And can companies maintain their pricing power? Without clear answers, investors are hitting the brakes. But inside this fog, the dry facts remain: the SaaS market is massive and continues to grow, even if the pace has shifted.

The point isn’t the exact growth percentage. The point is that underlying demand remains. Companies are reporting lower-than-expected churn rates, and the actual workload handled by software is increasing. Organizations still need CRMs, security tools, operational systems, data management, and automation. What’s changing is the distribution, the integration, and the business package—not the need itself.

The “Build-It-Yourself” Myth

The second argument goes like this: If we can generate anything today using models and agentic layers, why would companies buy? Why not just build? This leads to a better question: Can organizations customize more deeply than before? Yes. Do they want to build and maintain the core of every business system themselves? Almost always, no.

If I’m a pharmaceutical company, I have zero reason to turn into a software house just to build an internal CRM. I might want unique automations and integrations tailored to my business, but I don’t want to own the infrastructure, the continuous R&D, the maintenance, or the security layers around sensitive data. I want a SaaS product that allows for more flexibility.

Then there’s the stuff no one likes to put in a tweet: security, compliance, regulations, audits, and permissions. Any serious enterprise handling customer names, contracts, and financials won’t “play” with their data. They won’t risk an unmonitored, unmanaged environment without logs or role-based access control. They would prefer a product that comes with built-in protection, protocols, and a roadmap.

And even if we set security aside, what happens when there’s a bug? Who’s responsible for the fix? Who provides support? One of the greatest promises of SaaS is that you aren’t buying “code”; you’re buying a living system that someone is committed to operating and improving for you. AI doesn’t eliminate this need; it only raises the expectation for the system to improve faster.

From “Seat-Based” to “Value-Based” Pricing

The third argument is where the real shift is happening: pricing. Seat-based SaaS worked for years because it was simple: more employees meant more licenses, and growth was easy to model. But in the world of automation and AI agents, output won’t scale linearly with headcount. Teams will do the same work with fewer people, and if revenue is tied to seats, that math fuels the simplistic logic: “Fewer users = lower revenues = SaaS is dead.”

But that conclusion undervalues what the product actually delivers and ignores its continued relevance. Instead, we are witnessing a clear move toward usage-based pricing, volume-based models, or “value-based” (per outcome) pricing. It won’t matter if two employees use the system or fifty; if the system saves hours, mitigates risk, or increases conversion, it should be priced accordingly.

So yes, in the short term, uncertainty is pushing multiples down. But in the longer term, as the “build-it-yourself” myth fades and pricing shifts from seat-based to value-based, valuations will move back in line with the real demand behind SaaS products. That’s why SaaS isn’t going anywhere. The category is simply maturing, and we are about to see a new generation of SaaS companies built for this reality.

Read the Full article in CTech

The Liquidity Leap: After a period defined by cash preservation, will 2026 see the reopening of the IPO window for Israeli tech, or will M&A remain the sole viable liquidity event?

After a prolonged period of caution defined by war-driven uncertainty, the second half of 2025 marked a clear release of pent-up momentum. Private funding climbed back to around $15.6B, and we’re seeing strong signs that strategics are no longer sitting on the sidelines – they’re actively buying.

Looking ahead to 2026, we expect M&A to remain the dominant liquidity path. Naturally, activity will continue in Israel’s flagship sectors like cyber, but a parallel trend is taking shape: many solid companies that demonstrated real growth but ran out of runway are now seeking soft landings. On the other hand, corporates and PE firms that preserve capital are on the hunt for
undervalued opportunities. This creates a wave of exits with smaller ticket sizes – but high strategic value.

IPOs may reopen, but we see that as more realistic toward late 2026, and only for a select group of truly public-ready companies. Even then, the IPO path will compete with compelling acquisition offers (like ServiceNow’s $7.75B deal for Armis), so founders will continue to weigh certainty versus timing.

The Valuation Leap: Moving past the market correction, what is the single most critical metric (e.g., EBITDA, NRR) that will drive premium valuations in 2026?

As early-stage investors, we’re seeing that the path to a Series A isn’t defined by hitting a magic ARR number anymore. It’s about showing healthy QoQ growth and underlying efficiency – that’s what gets a partner meeting today.

We don’t believe there’s a single metric that tells the full story, but we’ve always had a strong bias toward NRR, especially when it’s paired with healthy, consistent growth. NRR is the cleanest signal of real product pull: customers expand over time, pricing power compounds, and growth becomes less dependent on landing new logos. It shows whether the product becomes more essential after adoption – not just whether it can be sold once.

And in frothy markets, it’s the best lie detector: expansion either happens or it doesn’t. With capital flowing back into the market and more institutional money entering the ecosystem, fundamentals can get blurry. NRR helps cut through that noise.

The Agentic Leap: As we transition from ‘Copilots’ to autonomous ‘Agents,’ which specific vertical will be the first to fully trust AI with independent decision-making?

Truly, we don’t think full autonomy will land in 2026 across most industries. Where we do expect agents to earn real trust quickly is in data-driven functions with tight feedback loops – starting with marketing and paid growth. Outcomes are measurable and fast (CPA, ROAS, creative performance,
funnel conversion), so teams can set guardrails and still let agents optimize continuously.

Beyond marketing, we expect meaningful autonomy in other domains where the loop is similarly closed and well-scoped. QA is a good example: agents can generate tests, run suites, detect regressions, and triage failures end-to-end under clear governance. The same pattern applies to additional operational areas where success is objective, measurable, and quickly verifiable.

In coding, finance, and sales, we don’t expect true end-to-end autonomy yet. The workflows are higher-risk, harder to fully verify, and require deeper context. That said, we do think agent capabilities will accelerate rapidly, so while full autonomy isn’t here in 2026, it’s getting closer than most people expect.

The Dual-Use Leap: Israel has mastered Defense Tech. Which civilian industry (e.g., Construction, Agri, Logistics) will see the biggest disruption from adapting these battle-tested technologies?

Wartime innovation in Israel is extraordinary – extreme constraints force solutions that are faster, tougher, and more operationally grounded than “lab tech.” Horizon’s view is simple – almost anything proven under battlefield conditions can become a commercial product once it’s translated into civilian workflows and procurement realities.

That said, the biggest disruptions will come where speed, resilience, and coordination matter most: logistics and supply chain, emergency response, and real-time situational awareness. The winners will be the teams that productize it cleanly – simple UX, measurable ROI, and auditability for
regulated customers.

The Contrarian Leap: What is one sector or trend currently ignored by the herd that you believe represents the most undervalued opportunity for the coming year?

One area we think will rise in 2026 is PropTech. In 2022-2025, higher interestrates and slower transaction volumes put the global category on pause, but as the cycle starts to loosen, we’re already seeing capital and adoption return – especially to products that cut real operating costs, not just “digitize the brochure.”

The rebound is visible: in 2025, global PropTech and adjacent real-estate tech investment reached $16.7B (up ~68% YoY), a meaningful shift after the slowdown. We believe 2026 will be the year when the next wave breaks through: vertical, workflow-owning systems (often agentic) that can manage property operations, building, maintenance, and energy optimization.

Real estate customers don’t adopt because it’s cool – they adopt when ROI is undeniable. The winners will be the companies tied to measurable efficiency, lower vacancies or operating costs, and faster cycles – not speculative growth narratives.

Finally, what are 2-3 startups that, in your opinion, are likely to make a leap forward in 2026?

Vee.com: Vee.com is an AI-powered platform helping nonprofits get funded quickly and easily. With AI members, Maggie, Grant, and Donna, work alongside nonprofits to streamline social media management, grant discovery and writing, and donor relations, so they can focus on what matters most – making a difference.

Spikerz: Spikerz is a social media security SaaS platform built for brands and public figures. It automatically detects and eliminates social media threats, including cyber-attacks, fake accounts, harmful comments, phishing attempts, spam, and scams. Spikerz keeps hackers out and protects every social channel in real time.

Bites: Bites was born from the real-world challenges of delivering training and communication to a modern workforce. Today, Bites empowers companies to train and upskill frontline teams with AI-driven, social-style content – delivered instantly through the channels they already use. In a world where people are immersed in social media and instant messaging, the idea for Bites became clear.

Read the dull interview here

One of the many ripple effects of October 7th is a professional reset for many Israelis. The AI revolution has lowered the barriers to entry, bringing entrepreneurship within reach even for those who didn’t grow up in the tech world. So why is it more possible than ever to start your own startup? And what tools can help you do it (almost) on your own? Here’s your guide to the age of accessible innovation.

Post-October 7th, Israel is not the same. Alongside the security and societal shock, the job market has undergone a fundamental shift. A recent survey by Israel’s Employment Service showed that 41% of reservists lost their jobs, and many others reported their partners had to leave theirs. This wave of instability has led thousands of talented, experienced Israelis—equipped with strong networks and a drive for change – to ask, What’s next?

In parallel, we’re seeing an unprecedented opportunity. GenAI is enabling a new generation of builders to channel uncertainty into action. For the first time, launching a tech company doesn’t require writing a single line of code. With the right tools and deep industry insight, determined founders can build something meaningful from day one.

Lower Barriers, Higher Potential

Not long ago, starting a startup meant spending years on development. Today, AI and no-code/low-code platforms have made entrepreneurship radically more accessible, even for those without a computer science degree or 8200 tech background.

Time-to-MVP has dropped from 18 months to three. Founders are launching, testing, and even raising funds with lean teams and minimal costs.

Five First Steps – Powered by AI

Here are just a few of the tools enabling this shift:

Product Development: Webflow, Make, Zapier, GitHub Copilot – for building websites, apps, and automations without code
Natural Language Coding: Base44, Lovable, Cursor – tools that let you generate complex code by describing what you want
Marketing & Sales: Albert.ai, Sora, Anyword, adcreative.ai, D-ID – for content, campaigns, video avatars, and more
Brand & Identity: Boardy.ai, Looka, LogoAI – to create your logo, brand colors, and graphic assets without a designer
Sales & Growth: HubSpot, Monday, Instantly, AI-powered voice agents – to automate outreach and manage pipelines

It’s Not for Everyone, But You Should Try

No, not everyone will build a unicorn. But never before have so many had the resources and skills to begin. Today’s startup journey is more DIY than ever. What once required a full team and years of work can now start from a solo founder at home. Tools that once cost thousands are now free. Skills once gated behind technical knowledge can now be accessed through natural language.

Israel’s startup ecosystem has proven itself time and again. After the 2008–2009 economic crisis, startup formation rose by 27%, producing some of today’s most recognized tech names. Will this be the next wave? Given the talent, drive, and momentum on the ground, it just might be.

Read it on Walla!

Self-fulfillment and leaving the law behind to build in tech.

Lior began his career as a lawyer but quickly realized it wasn’t the right path. He shifted into the tech and fintech world, trading legal frameworks for hands-on company building.

What it means to build a venture fund from scratch.

Lior and his partner launched Horizon without prior investing experience – treating it as a startup in its own right, complete with its own pitch process, learning curve, and pressure to prove value fast.

How friendship can work in business, if boundaries are clear.

They set ground rules from day one: friendship comes first, business second. Professional disagreements are dealt with directly, and personal trust stays intact.

The dynamic between co-founders, and what Horizon pays close attention to

From subtle looks in meetings to how roles are divided, Horizon places a strong emphasis on how startup founders interact, not just the business model.

Why focus matters more than vision at the early stage.

Lior urges founders to avoid distractions, skip the five-year plans, and build a short, focused path to the next funding round. “It’s very nice to think, you know, 5 or 10 years ahead, but in this world, when everything can blow up one morning, you can’t really do it. You need to have a great vision, but you need to be very focused.”

The challenge of monetizing AI products in a crowded market.

AI may be everywhere, but few founders know how to turn it into revenue. Lior breaks down the importance of testing pricing early and identifying real user value.

The current noise in the AI space – and how to think through it.

With so many startups riding the AI wave, it’s harder than ever to stand out. Horizon looks for teams that go beyond tech wrappers and hype and build something defensible.

How staying calm is a strategic advantage.

In a market that shifts by the day, Lior shares how he makes decisions without panicking – staying anchored in strategy, even when conditions are unpredictable.

If you’re looking for practical insights on founder dynamics, business focus, and building in uncertain times, this one’s for you.

Read More On Calcalist: https://www.calcalistech.com/ctechnews/article/jg0wu30su

Listen to the full podcast: https://reallifesuperpowers.com/podcast/lior-segal-co-founder-and-managing-partner-at-horizon-capital/

Philanthropy strategy

Philanthropy, like venture capital, requires strategy. Together with Keshet, we built a giving program that reflects our values and maximizes impact. Every decision -from choosing focus areas to evaluating nonprofit partners – was made with intention, transparency, and a long-term view. We measure outcomes. We iterate. And we stay involved.

We’re proud that our investors have joined us on this journey, aligning around a shared belief that success carries responsibility. Their engagement extends beyond capital; they take part in mentoring, networking, and supporting the students we serve.

When we founded Horizon in 2012, we aimed to help early-stage software startups grow from seed to scale. But from the start, we also knew we wanted to build something bigger than returns. We wanted to be a force for good.

At its best, this is what collaboration between the business and social sectors can look like: venture-backed giving that is strategic, measured, and deeply human. For us, community impact isn’t a separate activity from investing. It’s all part of the same mission: helping builders thrive.

This is how we define return.

The venture capital landscape is undergoing a fundamental shift. Traditionally, startups’ path to secure funding was clear: a small seed round, a significant Series A, followed by large-scale growth rounds ranging from tens to hundreds of millions of dollars to accelerate growth. However, the increasing integration of artificial intelligence (AI) into development, marketing, and operational processes is reshaping this trajectory at a pace that raises an important question: are venture capital investments still as necessary as they once were? As an early-stage VC firm, we see hundreds of startups each year. Over the last year or so, we’ve been noticing a growing number of companies that require significantly less funding to reach critical milestones.

AI’s ability to optimize processes, shorten development cycles, and reduce resource requirements allows startups to achieve significant traction with far less capital. A SaaS company developing a complex AI-driven product today may not need the same capital-intensive approach. With leaner teams, open-source tools, and AI-powered marketing automation, these startups can drastically reduce their time to market (TTM), as well as development and operational costs. Consider the case of software startups that once needed $5 million to reach a market-ready product and acquire their first customers. Today, many are achieving the same results with half the funding or even less. Within our portfolio, we already see companies that used $1.5M of funding to reach $1.5M ARR.

This shift is altering how startups approach fundraising. Instead of following a predictable, linear path, companies are embracing greater flexibility in capital raising. More startups are opting for bootstrapping or smaller funding rounds, allowing them to maintain greater control and ownership. As a result, venture funds are encountering startups at more advanced stages of maturity, sometimes with a solid customer base and revenue, before even seeking their first institutional check.

How Is This Affecting the Venture Capital Model?

If this trend continues, we could see a fundamental restructuring of venture capital itself. The number of funding rounds may shrink, and check sizes could decrease. Growth-stage funds are already adapting to a world where less capital is required in later stages and are possibly competing for earlier-stage deals to be more competitive.

This transformation presents a dual challenge for venture capital firms. On the one hand, it opens new opportunities: early-stage investments in AI-powered companies could generate even higher returns. On the other hand, funds that are structured to enter deals at later stages will need to adapt to a landscape where competition starts earlier.

For founders, this power shift means stronger negotiating leverage. Smaller funding rounds result in lower dilution, enabling them to retain a larger share of their companies. Additionally, heightened competition among investors could lead to more favorable deal terms for startups at the earliest stages. As seed investors, we are much more aligned with the founders, therefore, less dilution means better returns.

An Evolution, Not an Overnight Revolution

Despite the visible changes, the traditional capital-raising model isn’t disappearing overnight. Scaling quickly in a competitive market still requires meaningful capital. As technology continues to reduce costs and increase efficiency, the gap between startups that need $15-20 million to reach meaningful revenue and those that need $50 million will start closing. This likely means companies will require less funding to reach unicorn status. But does that mean these lean startups could beat your competitors with no money in their pockets? And will growth funds disappear, or will large rounds become obsolete? Not necessarily.

Founders who raise smart money, and not just big rounds, prove value quickly, and choose the right partners will be the ones who benefit most from this shift. The world is moving from a “raise as much as possible” mindset to a “raise wisely” approach, and the path forward is still unfolding. The rise of AI-driven efficiency doesn’t signal the end of venture capital as we know it, but it does mark a major evolution in how and when capital is deployed. Understanding how to navigate and leverage AI’s impact on funding strategies will be key to thriving in the next era of venture capital.

You can also find this opinion on CTech

“Companies like Session42 and Aiode belong to a second wave of AI-MusicTech apps – they don’t infringe on rights, and don’t replace producers and musicians.”

“We wouldn’t invest in companies that infringe on copyrights, because apps like Sono go against the music,” says Yaniv Jacobi, Managing Partner at Horizon Capital. “These apps don’t create anything new from scratch; they rely on a catalog of existing songs. They remind me of the Napster music file-sharing app, which didn’t have much left after the entire world sued it. Companies like Session42 and Aiode belong to a second wave of apps that don’t go against the industry, don’t infringe on rights, and don’t replace producers and musicians.”

It took the music industry more than two decades to regain the scale it had at the end of the 1990s. In 1999, global recorded music revenues reached a peak of $22.3 billion, but declining sales of CDs and physical records, coupled with the rise of pirate downloads, shrank the market to $13 billion by 2014. It was only in 2021 that revenues from recorded music returned to their 1999 level, thanks to the popularity of streaming apps like Spotify.

Yet, just when it appeared that the music industry had solved its distribution issues, a new and equally significant challenge emerged: AI-based apps that can automatically create songs with lyrics and melodies. The most well-known and successful of these is the American, ultra-user-friendly Suno. All you need to do is enter a description of up to 200 words—specifying the musical style and desired theme—to receive a brand-new song complete with lyrics, vocals, and melody. Suno’s biggest competitor is Udio, which received investment from Andreessen Horowitz.

Today, apps like Suno and Udio are often seen as a casual gimmick primarily intended for creating personalized birthday songs or short clips to share on social media. However, according to an in-depth study commissioned by CISAC (the International Confederation of Societies of Authors and Composers) and published last month, within five years these tools could cut up to a quarter of music creators’ revenues. Even if an AI-written song doesn’t top the charts, the study still points to several ways AI-generated music could shave billions off the earnings of producers and music creators.

“When a computer imitates musicians today, the sound it produces is robotic and synthetic,” explains Aiode CEO Idan Dobrecki. “We’re actually creating a model of the guitarist’s mind, how they play and what their signature style is. Then the software listens to the song that needs guitar and produces something tailored to the player’s style. Producers will always prefer working with real musicians, but their costs are very high. We’re democratizing the process of working with musicians.”

According to Dobrecki, apps like Suno are far from replacing human musicians. “Suno targets the lowest common denominator,” he says. “It works in a generic way and gives the producer very little control over the final product. Such apps will flood the industry with songs, but the gap between their level and quality music will remain large.’”

Read Ofir Dor’s full article for The Marker: After overcoming piracy, the music industry now faces an even bigger threat: Artificial Intelligence.