“To think that all software is the same, they’re missing the mark a bit,” managing partner Holden Spaht said in an interview on the new Bloomberg Deals television show, which aired Wednesday. “We think this could be a really exceptional buying opportunity.”
Wall Street has been dumping software-as-a-service providers in recent weeks amid fears that the products they offer will become redundant in the age of artificial intelligence. The selloff — dubbed by some as the SaaSpocalypse — has been exacerbated by new AI tools coming out of startups such as Anthropic PBC.
Thoma Bravo has specialized in software investing since being founded in 2008 and has backed companies including Anaplan, Darktrace and SailPoint Inc. This month, it completed its roughly $12.3 billion acquisition of Dayforce Inc. Executives at the firm have met with investors in the past week to discuss the impact of AI on the portfolio, Bloomberg News reported.
In his interview, Spaht said it was wrong to try and draw a clear line between SaaS companies and the new wave of AI applications coming to market.
“AI is software, software is AI if you do it right,” he said. “All of our software companies are using AI, they’re selling AI, they’re developing AI.”
Thoma Bravo targets companies that have lots of customers, with high renewal rates and deep knowledge of the domain in which they operate — whether that’s payroll or supply chain management — according to Spaht. Such providers “tend to index very well” in the current market, he said.
“I’d be dishonest to sit here and say that every company we have indexes as well,” Spaht said. “But 95% of our companies do index really well in this world of AI because we start with quality of revenue.”
While the majority of software companies are not publicly owned, there is typically a knock-on effect from stock selloffs on private market valuations. Spaht said Thoma Bravo will look in both arenas for new acquisitions.
“It usually takes private valuations a bit longer to adjust but there are people that are very risk off and they’re trying to diversify out of software, and so those are opportunities,” Spaht said.
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