The Service-as-Software Gold Rush
When I wrote about the rise of Service-as-Software earlier this year, I outlined what I believed would be one of the most significant opportunities for entrepreneurs in 2025. The thesis was simple: AI would transform traditional service businesses into software-like operations, maintaining the service experience while achieving software margins.
It turns out, we're not the only ones who recognized this opportunity.
The Billions Flooding In
Major VCs are now deploying massive capital into exactly this strategy:
General Catalyst: $1.5 billion allocated to their "Creation" strategy for modernizing legacy businesses with AI
Thrive Capital: ~$1 billion raised for a permanent vehicle to acquire and transform service businesses
Khosla Ventures: Cautiously entering with select deals
Elad Gil: Three years ahead, already backing companies like Enam Co. (valued at $300M+)
General Catalyst has gone so far as to reorganize their entire firm around this approach, calling it a "new asset class."
Why They're Betting Big
The math is irresistible. As Elad Gil explains, AI can transform gross margins from 10% to 40%—a 4x improvement. This creates a flywheel: higher margins enable more acquisitions, which drives more transformation, which increases competitive advantages.
Early results prove the model:
Long Lake (General Catalyst): $670M raised in under 2 years, 12 companies acquired
Carr, Riggs & Ingram (Bessemer): Projecting growth from $502M to $1.2B+ in 5 years
Call Centers: AI reducing costs by 50% while handling 80% of queries
What This Validation Means
When firms allocate billions to a strategy, it's no longer theoretical—it's a proven opportunity. This validates our core predictions:
The market is massive (industries representing ~50% of US workforce)
The transformation is achievable today
First movers will capture outsized value
The model works across multiple verticals
The Entrepreneur's Opportunity
While major VCs focus on roll-ups and acquisitions, enormous opportunity remains for entrepreneurs to:
Build Service-as-Software companies from scratch
Target untapped verticals
Partner with VCs who need vertical expertise
Move faster than large-scale acquisition plays
The competition will intensify, but the market is vast enough for multiple winners. Speed and execution matter more than ever.
Our Continued Focus
At Fieldcrest Ventures, this validation strengthens our conviction. We're doubling down on building and transforming businesses that deliver outcomes, not just tools. The fact that top VCs are calling this a "new asset class" confirms what we've believed all along: this is a fundamental shift in how value is created.
The gold rush has begun. The only question is: who will stake the claims?
