Why Networked Saas is the new AI business model replacing per-seat pricing

Stop selling one-size-fits-all software. The next wave of SaaS winners won’t just deliver tools; they’ll own the ecosystem. 

As artificial intelligence reshapes industries, a new business model is emerging that’s built not just to deliver tools, but to orchestrate entire ecosystems. We call this new model Networked SaaS, and it represents a transformational shift from traditional SaaS towards AI-powered platforms that connect multiple stakeholders within a vertical, unlocking compounding growth through network effects. This isn’t about serving one user; it’s about activating the entire value chain.

This model unlocks growth in traditionally software-sparse industries like healthcare, government procurement, education, and supply chain logistics, where point solutions run into inevitable chokepoints. These markets have long resisted digitization due to complex workflows, regulations, and budget constraints.

With multiple unicorns in our portfolio already pioneering this strategy, we believe Networked SaaS is poised to power the next generation of category-defining, multi-billion-dollar companies. This thesis outlines why.

The evolution of SaaS models

SaaS was built horizontal but it’s scaling vertical.

The SaaS model has transformed enterprise software by replacing expensive, on-premise systems with scalable, cloud-native solutions. In its early stages, the most successful SaaS businesses were horizontal, offering a single product that could serve many industries. Think Salesforce for CRM, Slack for communication, or Zoom for video conferencing. These tools solved broad, functional problems and scaled rapidly by targeting shared workflows across diverse sectors.

But as the SaaS landscape matured, vertical SaaS emerged to meet the nuanced needs of industry-specific workflows. Companies like Procore (construction), Veeva Systems (life sciences), and Toast (restaurant POS) carved out defensible positions by building software tailored to the complexities, regulations, and workflows of a single vertical. 

Vertical SaaS typically enjoys:

- Higher retention due to purpose-built features
- Deeper integrations into industry-specific systems of record
- A more natural wedge into financial services or procurement flows
- Less direct competition in overlooked or less complex verticals, creating opportunities to dominate niche markets

The limitations of traditional SaaS

While horizontal and vertical SaaS have created massive value, both models face growing constraints, especially in fragmented industries like healthcare, education, and government. These sectors involve multiple disconnected stakeholders with conflicting incentives, and legacy systems that don't talk to each other.

The core limitations of traditional SaaS include:
- Fragmented stakeholder ecosystems: Traditional SaaS often serves only one stakeholder (e.g., the clinic administrator) while ignoring others critical to the transaction (e.g., patients, suppliers, payers, regulators).
- Lack of end-to-end integration: Products don’t extend far enough into the transaction layer to influence outcomes (e.g., reimbursements, procurement).
- Slow adoption in high-friction markets: Vertical SaaS may be tailored to an industry, but still faces resistance in sectors where the buyer doesn’t have a budget (e.g., nurses, school staff) or the adoption cycle is heavily gated (e.g., government procurement).

As AI reshapes workflow automation and companies seek higher efficiency per dollar, a new SaaS paradigm is emerging.

The rise of Networked SaaS

Networked SaaS represents the next major wave of enterprise software, combining the depth of vertical SaaS with the dynamism of marketplaces and the automation potential of AI. While traditional SaaS products sell licenses/seats to a single stakeholder or connect supply and demand like a marketplace, Networked SaaS platforms unify fragmented ecosystems by embedding deeply into one stakeholder’s workflow and then coordinating the entire transaction flow.

Unlike two-sided marketplaces that focus on matchmaking—and often get bypassed after the initial connection—Networked SaaS delivers unique, lasting value to each side of the transaction, keeping them engaged well beyond the first interaction.

For example:
- A school may get a free ordering platform for lunches.
- A food service provider pays to receive and fulfill orders.
- The platform eventually monetizes payments, logistics, or financing on top.

This model is uniquely suited to complex, compliance-heavy industries where users with day-to-day control over workflows (like nurses or procurement officers) are different from those who control budgets. In these contexts, traditional software often fails due to slow procurement cycles and poor cross-stakeholder integration.

We believe Networked SaaS will produce the next generation of category-defining companies. In this article, we’ll explore how this model works in practice, where it’s gaining traction, and what it takes to build enduring value in this emerging paradigm.

Unlocking compounding value in high-friction industries

Networked SaaS starts by identifying a critical, manual, high-friction workflow owned by a stakeholder with little to no budget but with deep influence over transactions. In this model, the company first gives this stakeholder a powerful AI-driven tool for free. This tool automates a tedious, document-heavy process, making it indispensable.

Once the platform becomes embedded in that workflow, it gains visibility and control over the broader downstream transaction flows. Monetization doesn’t come from the free user, but from taking a cut of the much larger downstream transactions involving suppliers, payers, or financial institutions.

AI is the critical catalyst in this model. The dizzying rate of AI advancements has made it possible to automate complex, research-intensive, and document-heavy workflows that were previously untouchable, like prior authorizations in healthcare or RFPs in government contracting. It’s the "wedge" that makes the free tool so valuable that it pulls in the entire ecosystem.

This model creates a powerful flywheel:

• Give away an AI-powered workflow tool for free to a user with influence but no budget
• Use the tool to capture downstream activities
• Monetize the transactions through stakeholders who have the budget (suppliers, payers)
• Use the data and network position to build compounding moats by expanding services, offering more value to every participant, and locking in the entire ecosystem

By embedding into workflows, leveraging AI to automate the most cumbersome ones, and automating the connective tissue between parties, Networked SaaS becomes both the system of record and the system of engagement for entire industries. This creates both immense value and sticky network effects.

Workflow first, revenue follows: Examples of Networked SaaS execution

The most successful Networked SaaS platforms don’t lead with monetization; they earn it by solving critical workflow pain points in industries long underserved by software. By embedding deeply into daily operations, these platforms become indispensable, then unlock revenue through the transactions and ecosystems they power. From healthcare and education to construction and government, here’s how this model is driving real-world impact. Here are some real-world examples:

- The quintessential example of this model is our portfolio company, Verse Medical. The founders identified that nurses in specialized medical fields control millions of dollars in annual supply orders and are buried in manual paperwork, faxes, and phone calls—yet have no software budget.

- Our portfolio company, Grow Therapy, exemplifies Networked SaaS in one powerful package. It provides therapists with a full “business-in-a-box” platform that handles everything from credentialing and telehealth to billing and clinical workflows, while simultaneously connecting clients and payers through seamless insurance and care coordination. This reinforces network effects across all stakeholders and monetizes via therapy session revenue share, provider platform fees, and payer partnerships.

- Stampli (a SignalFire portfolio company) is transforming Accounts Payable and Procurement with automated workflows and monetizing through financial transaction processing.

- In construction, companies like Joist (a SignalFire portfolio company) use AI to streamline the bidding process by helping contractors quickly generate professional estimates and RFPs for free. They then monetize the workflow through financing, payments, and premium tools. 

- And in government and construction, startups like Sweetspot are using AI to automate the creation of complex requests for proposals (RFPs) for free, positioning themselves to monetize the resulting procurement contracts.

A closer look at Verse Medical’s winning model

Verse Medical provides nurses with a free, AI-powered platform that radically streamlines the ordering process for medical supplies. By doing so, their platform captures the entire procurement transaction workflow. Verse monetizes its solution not by charging the nurses, but by being the middle layer of the transaction between medical suppliers and insurance payers, creating value for both. As Verse scales, it gains immense leverage. It can negotiate better rates from suppliers and demonstrate improved patient outcomes to payers, deepening its moat and capturing more value. The bigger the network gets, the more indispensable it becomes to all the parties involved.

How Verse Medical works:

• Provides a free, AI-powered ordering platform for nurses, significantly streamlining medical supply procurement, patient eligibility, insurance verification, and more
• Monetizes downstream through billing insurance companies and suppliers, taking a percentage of transactions.
• Has grown rapidly, handling billions of dollars in transaction volume annually, proving the viability and scalability of this approach.

1. Compounding network effects

The value of these platforms grows exponentially with each new participant. For instance, Verse Medical's growing user base gives it increased leverage to negotiate better terms with suppliers and insurers, creating a defensible moat that's hard for new entrants to overcome.

2. AI-powered automation

AI technology, particularly large language models (LLMs), enables automation of complex document-driven processes (e.g., RFP proposal automation, RCM-related eligibility and verification workflows, regulatory compliance forms, medical supply orders), dramatically reducing manual labor, errors, and processing time.

3. Transactional monetization

Instead of charging traditional per-seat licensing fees, these startups monetize through transaction fees, analytics subscriptions, and premium data services. This approach unlocks previously inaccessible budgets, making it easier to gain rapid adoption and revenue growth.

Where Networked SaaS could unlock trillions in value

We believe this model could unlock over $1.2 trillion in value by 2030, especially in sectors where outdated processes are costing billions.

Industries ripe for disruption by this model include:

• Healthcare: An estimated $812 billion is spent annually on administrative tasks. Platforms like Verse Medical directly address this massive opportunity.
• Government Procurement: Billions of dollars are managed annually through manual RFP processes and phone calls. AI can reduce the time to bid from months to days.
• Education & Food Services: Fragmented procurement systems present large-scale monetization opportunities through streamlined ordering and logistics linking buyers and suppliers.

Risks and challenges of Networked SaaS models

Building a Networked SaaS business isn't just about the product. It's about navigating a complex web of stakeholders, incentives, and compliance requirements. Founders must make tough early calls on who to serve, how to monetize, and how to stay ahead of ever-evolving regulatory demands.

Here are the biggest challenges founders must navigate:

• Stakeholder Prioritization: Most verticals involve multiple decision-makers, but not all of them influence daily workflows or hold the budgets. Winning early adoption means identifying and serving the user closest to the transaction, whether that’s a nurse ordering supplies or a procurement officer managing bids. Get this wrong, and you risk building for the wrong persona. 
• Monetization Risk: The model often starts by giving away workflow tools for free to gain adoption, but monetization depends on someone else further down the value chain (like payers or suppliers) paying for them. Founders must ensure downstream participants will pay for premium services despite the initial free adoption and do this without alienating the stakeholders who made the platform sticky in the first place. 
• Operational Complexity: Networked SaaS means building not one product but a platform for multiple users with distinct workflows, UX needs, and value props. Founders must design modular systems that serve everyone—for example, frontline staff to payers—effectively operating like a multi-product company from day one.
• Compliance and Regulatory Complexity: Deep verticals often come with deep red tape. Healthcare, government, and education all carry unique regulatory burdens. Founders need technical chops, domain fluency, and dedicated compliance infrastructure to scale safely and stay credible with enterprise buyers.

Why we're investing and what we're looking for

At SignalFire, we are actively seeking and investing in the next wave of Networked SaaS companies. To us, this isn't just a trend; it's a fundamental shift in how enterprise value will be created in the AI era.

This model allows startups to sidestep prohibitive sales cycles and achieve enterprise-level revenue through a bottom-up, product-led motion.

It builds powerful, multi-sided network effects that create durable, long-term moats. The AI flywheel at its core—where more data leads to a smarter system, which in turn attracts more users and generates more data—creates compounding advantages that are nearly impossible for competitors to replicate.

When we evaluate companies in this space, we look for founders who:

• Have a deep, nuanced understanding of a complex vertical: They have lived the pain of the manual workflows they seek to automate. They know who the real influencers are, not just who holds the budget.
• Accurately identify the "keystone" stakeholder: They know which side of the network to prioritize first. The most successful founders build for the hardest side to aggregate (like Verse’s nurses), knowing that once they have that distribution, the other stakeholders will follow.
• See AI as a transformative wedge, not a feature: They use AI to solve a problem so painful that users will flock to a free solution, allowing the company to capture the downstream value chain.
• Have a clear-eyed view of monetization: They understand the risk of "false positive" adoption with free products and have a validated plan to monetize the transaction with the budget-holding stakeholders in the ecosystem.

As AI advances, the opportunity for multi-sided, workflow-embedded platforms grows. Industries once resistant to digitization are leapfrogging traditional procurement, adopting tools that streamline transactions, reduce manual effort, and expand moats through network effects.

We believe Networked SaaS will power the next generation of category-defining companies. With vertical focus, marketplace-style monetization, and AI-native workflows, these startups capture value in ways legacy SaaS cannot, transforming into the new systems of record for their industries.

At SignalFire, we back founders with deep domain expertise and bold visions for AI-driven ecosystem transformation. The time to build is now—before early leaders lock in their dominance. If you’re building in this space, we want to hear from you. Email me at wayne@signalfire.com.