The Twenty Minute VC (20VC) · Monday, August 31, 2026
Aaron Katz suggests that while many AI companies operate with lower gross margins than traditional SaaS companies, investors may be satisfied as long as a path to margin expansion is demonstrated. He contrasts this with concerns about gross margins five years ago in enterprise software.
“I think as long as they can demonstrate a path to margin expansion over the course of the next few years, while still growing at these unprecedented levels with very healthy balance sheets, I worry less about gross margins like we did five years ago in traditional enterprise software.”