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The SaaSpocalypse has both changed valuation metrics and presented opportunities, but the disruption is coming to an end, Orlando Bravo tells Axios Pro.

This interview has been lightly edited for length and clarity.

Axios: Do you feel like the software market disruption is starting to settle down?

Bravo: "This apocalypse is over. It was a lot of confusion in the first place, and a lot of it as well was this Twitter narrative heavily driven by the startup companies.

It is a completely new phase of innovation for software. Software at the beginning innovated or automated a tiny portion of a company. Then SaaS came in, and you (could) automate a lot more of a company's functions, and that's where software began to grow exponentially. 

Now, with AI, you can automate human judgment to some extent. The public markets are realizing that companies can successfully adapt."

How will you look back on the SaaSpocalypse and its effects?

"It woke up public companies to a better valuation metric, which is free cash flow, not revenue multiples. That is a very healthy shock to the system.

But more importantly, it woke up these companies to transform their businesses for the agentic future. It shocked them, and they pivoted so fast, and I've never seen a faster pace of innovation in software." 

What are some areas of interest right now in software?

"50% of our latest invested fund is in cybersecurity. Talk about an area that's booming with AI, and think about how the market got it wrong initially. 

When a couple of announcements from Anthropic came out, the cybersecurity stocks ... plummeted, and since then, I mean they're just booming."

What is going on with private credit and software right now?

"The issue in private credit is not the software industry. The issue is that a lot of private equity groups thought that doing software was easy. Since 2022, many have come to hold onto these companies for a long time, and now those issues of lack of innovation and the way these companies are run, and who their leaders are, are showing up. They're showing up in a way that the growth is lower; the leverage, therefore, is too high.

There's also the issue — are you a private credit investor for return or are you a private credit investor for raising money? If you raise a lot of retail money and the narrative is to have less software, then you're not going to want to do software, but if you're after great investment, risk-adjusted great investment returns, there's some beautiful opportunities right now."

Orlando Bravo says SaaSpocalypse is over

The private equity giant sees a huge opportunity in cybersecurity.

Photo illustration of Orlando Bravo next to colored blocks and a pattern of the Thoma Bravo logo.

Photo illustration: Axios Visuals. Photo: Scott McIntyre/Bloomberg via Getty Images

<p>The SaaSpocalypse has both changed valuation metrics and presented opportunities, but the disruption is coming to an end, Orlando Bravo tells Axios Pro.</p>

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Orlando Bravo says SaaSpocalypse is over

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