New VC Fund is betting on early-stage Vertical SaaS

It’s not an understatement to say that AI is going to transform the efficiency of teams everywhere. SaaS startups in particular are compelled to understand how they can reach individuals to drive product-enabled growth and virality. 

Now, Pitbull Ventures, founded by Jewish investor Brad Zions, is set to help more AI-powered SaaS products hit the market. The $5M USD fund, which is announcing its close today, is betting on AI-enabled vertical SaaS startups with promising early traction, and guiding them toward the next stages of growth with the support of the fund’s expert team. 

To date, the fund has backed 15 vertical SaaS early-stage startups. The team has invested across a variety of SaaS industries, with its portfolio including everything from FinOps to IT distribution services to restaurant tech.

The news of this fund comes during the biggest downturn in venture capital activity for five years. This being said an increasingly larger share of VC investments are going to AI companies, with 10% of all startup funding in the first month of Q1 going to the AI sector.

Further, the Israeli startup scene also looks set to ride the growing interest surrounding AI-enabled vertical SaaS solutions. Although still an emerging segment of the software market, we’ll likely see many more niche SaaS startups emerging from Israel in the next few years. This is because vertical SaaS has the potential to offer much more value to users as solutions are custom-tailored to cater to the needs and problems of a specific industry. 

Founders in the region will not only access expertise that has helped other vertical SaaS solutions including Harri, VidMob, and Embrace, but also mark a welcome new funding option. 

Supporting vertical SaaS solutions into their next stage of growth

While sectors like biotech are growing quickly, one Jewish tech investor is focusing his attention on the future of Vertical SaaS startups. Brad Zions has been an active early-stage investor for the past 25 years, both as a partner at Structure Fund and individually, before founding Pitbull Ventures in 2021. 

After closing a $5M Fund, Zions and his team are looking for early-stage SaaS startups that can demonstrate early results in a specific industry niche. 

Although Zions has decades of experience as a tech entrepreneur and serial investor, he’s also no stranger to glitz and glamour. In 2001 he acted as Producer on the movie ‘Kissing Jessica Stein’ which follows the romantic adventures of Stein, a 28-year-old Jewish copy editor living in New York. 

With the backing of a new $5M fund, Zions is committed to helping founders working on vertical SaaS solutions ride into the next stage of growth. Pitbull Ventures prefers to bet on founding teams that are leveraging AI and have demonstrated early product market fit. 

The Founder and Managing Partner commented, “The launch of our new fund’s closing is thanks to the unwavering dedication of our investment team and the support of our amazing LPs.”

The future of SaaS is vertical 

Said Index Ventures partner Paris Heymann, “Vertical AI is the next logical iteration of vertical SaaS.”

Put another way, similar to enterprises looking for cloud-based solutions, there’s a good chance those same companies will also be looking to purchase AI applications as well. Increasingly we should expect to see more vertical approaches.  

TLV Partners Principal Yonatan Mandelbaum, adding to this, said that the most successful vertical SaaS products will be those built by founders who have “experienced the pain of their target vertical firsthand.”

Thanks to advances in generative AI and LLMs, these new SaaS solutions can pivot more quickly and deliver a highly refined, seamless user experience that is unique to each use case. 

With new funds and ventures in this space emerging, it’s looking increasingly likely that we’ll be seeing AI breathe new life back into this SaaS sector.