Topline · 18 Jan 2026 · From the week of 12 January
These Charts Explain 2026
These are notes on the conversation, checked against its transcript. The episode itself has the full discussion.
In brief
Sam Jacobs (CEO of Pavilion), Asad Zaman (CEO of Sales Talent Agency) and AJ Bruno (CEO of Quotapath), the co-hosts of Topline, debate their 2026 predictions using charts. They cover the M&A rebound, venture capital concentrating in fewer companies, the AI share of scale-up investment, founder fatigue and deals that clear at lower multiples, and layoffs and hiring. Their central argument is that 2026 will be a year of clearing deals in which companies restructure and accept lower multiples, while a credible AI-native story determines who earns a premium valuation.
For founders
- Sam Jacobs predicts that SaaS businesses growing 30 to 40 percent with 10 to 20 percent EBITDA margins will trade at about six times ARR rather than ten.
- Sam Jacobs describes a restructuring in which a company whose cap table no longer fits its growth plan offers its Series B investor pennies on the dollar to return to the Series A valuation.
- AJ Bruno says buyers want something that fills a need, and that without an AI-native story a transaction may not happen.
- Asad Zaman says funds that cannot raise a new vehicle push for exits from weaker holdings, and AJ Bruno says fund managers stack rank companies starting with retention.
- Asad Zaman argues, and Sam Jacobs agrees, that a seed-stage company that is not working does not need a soft-landing exit, because the investors knew the risks they were taking.
For revenue leaders
- Asad Zaman says layoffs were concentrated in fewer companies in 2025, with the average number of layoffs per company rising 86 percent year over year.
- A speaker described an AI company with 150 million ARR that runs about 30 salespeople, where it would have needed 60 to 90 in the past, while still hiring aggressively.
- AJ Bruno says fund managers rank portfolio companies by retention first, so companies in the bottom quartile are the ones pushed toward exit.
- AJ Bruno told operators that if their CEO is not setting out an AI narrative for the company, they need to ask hard questions.
What was said 23, most useful first
A founder could offer a Series B investor pennies on the dollar to return to the Series A valuation, removing them from the cap table so the company can pursue its own growth plan. Listen
Sam says investors in 2021-vintage funds are exhausted and want to recycle capital into winners, and founders are equally tired. He describes this restructuring for companies whose cap table is optimized for hypergrowth they will not pursue, so that remaining holders have upside. He expects a lot of this to happen in 2026.
“take your series B investor, offer them pennies on the dollar to go back to the series A valuation, get them off the cap table”
Listen to the episode Fundraising & investors Link to this Report a problem
Sam predicts SaaS businesses growing 30 to 40 percent with 10 to 20 percent EBITDA margins, a rule of 50 to 60, will trade at about six times ARR rather than ten. Listen
Sam says these companies will still trade, but not at the roughly 10 times ARR that high-growth SaaS businesses have commanded. He ties this to the market clearing in 2026, when founders are ready to do deals they refused two years ago. He describes the multiple as a prediction, not a current figure.
“those are only going to trade at six times ARR”
Listen to the episode Metrics & finance Link to this Report a problem
A company claiming rule of 67 on a 27 percent adjusted EBITDA margin had true EBITDA of 6 percent and still sold at five and a half to six times ARR. Listen
Sam described a $10 million business growing to $14 million that claimed rule of 67 on adjusted EBITDA. When he spoke to a friend involved, the true EBITDA was 6 percent, with bankers having adjusted the figure upward. Sam says the deal still cleared at 5.5 to 6 times ARR, which he treats as a good outcome for the founder and the investors.
“The business traded. It traded like five and a half to six times ARR.”
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AI-native companies took about 23 percent of Silicon Valley scale-up investment in 2021, but 93 percent of the $111 billion invested through Q3 2025. Listen
AJ shared Crunchbase data on Silicon Valley scale-up investment, using Crunchbase's definition, and put an asterisk on the 2021 AI figure about what counted as generative AI at the time. He said 2021 saw $161 billion of scale-up investment, with about $37.7 billion going to AI companies. He described the change as a striking difference.
“So this is what it looks like. Look at this striking striking difference.”
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Global M&A value rose to $4.55 trillion in 2025, and Sam predicts 2026 will beat that as deals flow down into the middle market. Listen
Sam cited total global M&A value rising from $3 trillion in 2024 to $4.55 trillion in 2025, with 68 transactions above $10 billion in 2025. He predicts overall deal volume will keep surging in 2026 and that deals will flow down through the middle market. He calls it the year of the deal because deal structures will become more elaborate as the market clears 2021-vintage funds.
“2026 is the year of the deal. That is my prediction.”
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Sam sees three paths for SaaS in 2026: AI-native companies chasing very high growth, AI-first SaaS that must show AI in growth or efficiency numbers, and non-AI companies retrenching around long-term value. Listen
He cited AI-native companies pursuing 400 to 500 percent growth and said Lovable claims it reached 4 billion ARR faster than any company. He said AI-first SaaS that injects AI into existing products must show it in growth or efficiency numbers. He said Pavilion itself is taking the third path, focused on long-term compounding value.
“there's going to be a third category of businesses that say, you know what, we're not AI native.”
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41% of all venture capital was deployed into only 10 companies. Listen
Asad cited this as evidence of concentration, which he said Peter Walker identified as a theme of venture capital in 2025 in the Topline editorial. He also pointed to the S&P 500, where most returns were driven by 10 companies. He presented it as proof that concentration is a broader technology-industry theme.
“41% of all venture capital was deployed at only 10 companies.”
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Venture capital deployed each year rose from 2023 to 2025 while going into fewer companies. Listen
Asad described an early-stage venture chart showing that each year over 2023, 2024 and 2025 more capital was deployed but across fewer companies. He said investors used to spread bets widely because no one could tell which company would make it, and now feel more confident concentrating into fewer organizations.
“every year we deployed more capital into the market but across less companies.”
Listen to the episode Fundraising & investors Link to this Report a problem
Asad predicts that concentration of capital will stay the same or rise by about 10 percent in 2026. Listen
He said concentration was a theme of the market in 2025 and argued that themes shape decisions people make without noticing. He expects it to hold steady or increase next year. He also said the split shows up in the job market, where strong people face a different market from everyone else.
“it's probably going to stay the same or increase by about 10% next year.”
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MIT research cited by Asad found that 95 percent of enterprise AI pilots provide no ROI, so only 5 percent do. Listen
Asad used this study as one example of concentration across the economy, alongside the S&P 500 and M&A. He said it is one of the signals showing that returns from AI are concentrated in a small share of efforts.
“MIT shared a study that 95% of AI pilots are providing no ROI at the enterprise level”
A company without an AI-native story may not get an M&A transaction, because buyers want to buy something that fills a need rather than be sold something. Listen
AJ said that to get a transaction you have to have an AI-native story, otherwise it will be pencils down. He told operators planning for 2026 who came from traditional SaaS to put the company narrative at the center of their energy. Sam disagreed, saying there is still a deal to be done for non-AI companies at lower multiples.
“you have to have an AI native story to have an M&A transaction. Otherwise, it will be pencils down.”
Listen to the episode Positioning & marketing Link to this Report a problem
Founders without a clear growth path will accept lower multiples as an exit, because they are tired and want to take the win and restart. Listen
Sam said that a company without a clear growth strategy or energy will say fine, let's do a deal and call it an exit. He noted that many companies did exits last year where nobody made much money, but the founders could refresh or restart. He said this will happen even though founders will not be excited about the multiple.
“they're going to be more excited about taking the win and starting over than they are because they don't have another option every day.”
Listen to the episode Fundraising & investors Link to this Report a problem
Cashless acquisitions of stuck competitors can give a company customer share and a stake in a better business, when the target has no path to growth or risk capital. Listen
Asad described a founder who completed a significant acquisition of a larger competitor and was in late stages on three more cashless deals for the first half of the year. The targets could survive but had no path to growth and no access to risk capital, and the acquirer captured customer share. Asad said the company was really sharp in how it structured and moved on the deals.
“But I think there are a lot of these cashless transactions that are happening where you might not get money up front or might get a little bit of it, but you will get a stake in maybe a better business.”
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Fund managers stack rank portfolio companies by retention and KPIs, and the bottom quartile is where they look to exit first. Listen
AJ described a fund manager's exercise of listing portfolio companies on a whiteboard, anonymizing them and stack ranking them by KPIs, starting with retention. The bottom quartile is where the manager wants out fastest so the capital can work elsewhere. AJ said seeing this objective view helped him take emotion out of his own retention problem.
“that bottom quartile is in that bucket of things that Asad just said like how do we get out of this investment as soon as possible”
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Funds that cannot raise a new vehicle lose management fees and face LP pressure, so they sell weaker holdings at a loss and concentrate capital in winners. Listen
Asad explained that LPs will not commit new capital until managers sort out old funds, so managers look for exits. Companies with no path to upside are sold, even at a loss, and capital is recycled into one or two companies the manager believes can work. He said a 1.5x return on a 2020-vintage fund could let a manager raise more money.
“the LPS is saying till you sort out the mess of these old funds we're not giving you new capital”
Listen to the episode Fundraising & investors Link to this Report a problem
A seed-stage company that is not working does not need to find a soft-landing acquirer, because investors know the risks and losses on seed deals are acceptable. Listen
Asad described a friend who raised a $1 million seed, found the company was not working, and had been advised to find a buyer that would also hire them as an executive. Asad said angels and venture investors know what they're doing and it is fine if they lose money. Sam agreed it does not matter, saying a VC who lost $50,000 will get over it.
“Like I think it doesn't really matter. Some some VC invested 50,000 that they lost. Okay. Like they'll get over it.”
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OpenAI has lost about $150 billion over five years, while Uber's $40 billion cumulative loss came over 13 years before it turned a profit. Listen
Sam cited a chart of the largest cumulative losses before companies turned a profit, with Uber previously the largest. He argued OpenAI does not generate cash, so it must keep borrowing or raising to fund data center buildouts. He said he would not invest in OpenAI at a trillion dollars but might invest in Anthropic.
“Uber which lost $40 billion but it lost it over 13 years before turning a profit.”
He doesn't miss OpenAI much after switching to Google and Anthropic, so OpenAI currently lacks built-in stickiness. Listen
Asad ran an experiment in which he reduced his OpenAI use and used Google and Anthropic more. He said the product feels sticky while in use but he does not miss it once he moves to another product. He argued OpenAI must solve stickiness to become a great future company, and that it has not solved it yet despite its consumer lead.
“And so there's not actual built-in stickiness there.”
Layoffs in 2025 were concentrated in fewer companies, with the average number of layoffs per company rising 86 percent year over year. Listen
Asad said fewer people were laid off last year across fewer organizations than in the previous three years, but the average per company rose sharply. He said many of the roles cut were in areas where AI had strong product market fit, such as support, design, sales and engineering, which he believes was driven by AI.
“It increased 86% year-over-year, meaning that the layoffs were concentrated within fewer organizations.”
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Asad predicts 2026 layoffs will be close to double the 2023 peak, as more mid-market and enterprise companies learn to capture AI benefits and cut staff. Listen
He said every company that gets AI benefits and can cut staff will cut staff, and that more upper mid-market and enterprise companies will learn to do this. He said this does not mean high unemployment, since demand for talent remains high at the same time as layoffs.
“I think if you look at the companies, every company when they get the benefit from AI and can cut staff will cut staff.”
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The talent market has split in two: for people who are really good it has never been harder, and everyone else faces a different market. Listen
He said that when people talk about tough job searches, the experiences differ by talent level, and this split reflects inequality. He advised remembering that a few conversations can push people into a one-sided view of the market.
“There's the job market for people that are really really good and for them it's never been harder and then the job market for everybody else.”
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Cursor pulled a lot of top talent in its space because it had product market fit, resources, and treated talent as a priority. Listen
Asad said Cursor prioritized talent early, did things differently from other firms, and sucked up much of the good talent in its space. He said only players far better capitalized, such as Anthropic and OpenAI, now have the confidence to compete with it for that talent.
“They had the product market fit. They had the resources.”
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A top AI company with about 150 million ARR now runs around 30 salespeople, where it would have had 60 to 90 in the past, but is still hiring aggressively. Listen
Asad described a friend who joined this company, which has 150 million ARR and 30 salespeople. He said it would once have had 60 to 90 salespeople at this ARR, and that headcount is now lower per dollar, although the company still has many open roles.
“150 million in ARR, 30 salespeople. In the past, that company would have had 60 or 70 or 80 or 90 salespeople.”
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