Thoma Bravo Co-Founder Orlando Bravo Talks Mega IPOs, SaaSpocalypse

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Private market deal makers gathering at the annual SuperReturn Conference over in Germany. Dani Burger focused on many of these issues. She joined us now from Berlin. Hey, Dani.

**Dani Burger** (0:16)
Hey, John, that's correct. And there's one issue I want to focus in on particular, and it is the state of software and private equity. We have the leading voice to talk about that. It is Orlando Bravo, the co-founder of Thoma Bravo. Orlando, always a pleasure to see you here.

**Orlando Bravo** (0:30)
Dani, so good to see you. This is our yearly tradition.

**Dani Burger** (0:32)
It is our yearly. I would be gutted if we didn't meet. Same place, same time, every single year.

**Orlando Bravo** (0:36)
One of the reasons I come here is to do this.

**Dani Burger** (0:38)
Okay, hopefully among the top. And I know this year you have a particular message. I remember earlier this year, you were talking at Sone saying, the SaaSpocalypse, the worst is over. Does it go further in your mind, just the worst being over? But is this thing over, Orlando? Where are we in the world of the SaaSpocalypse?

**Orlando Bravo** (0:53)
Dani, SaaSpocalypse for whatever term, that's a terrible term, by the way. I really don't like that term. It is finished, no more.
And it's pretty simple, you know, people are realizing that these are unbelievable companies. And you look at the numbers coming out, even after the first quarter. And secondly, and more importantly, people are realizing that SaaS companies just don't stay still. They're not static.
They evolve with infrastructure. They evolve with opportunity. And SaaS and Agentic are gonna merge very, very, very quickly. And these companies are the future of agents in the enterprise. And the market is realizing that as well.

**Dani Burger** (1:34)
So the freak out is over, essentially. Is that what you're saying? In private markets, is this stuff starting to be realized? Your portfolio, maybe some of your peers, at the valuations that you think they should have, or is there still some frozen asset, some stickiness that has yet to come unglued?

**Orlando Bravo** (1:49)
In private equity, the environment is pretty stuck right now. Now, I do think that private equity is the voice of reason in a lot of this, because it makes sense that deal activity is a lot slower.
Because if you're going to buy a technology company or a software company, a solution provider to the enterprise, now you really want to see that they're making a lot of progress around their AI offerings. Enough time has passed that you should see that in the business, because that's where the whole world is going to evolve to. So, why not wait a little longer before you pull the trigger and have a little bit more clarity? That makes sense to me.

**Dani Burger** (2:26)
That doesn't sound like the worst is over, Orlando. It seems like there's still things that need to be tested and figured out. So what is the aspect? Is it just are you saying our companies are healthy, or is there something else that the worst of the freakout is truly over?

**Orlando Bravo** (2:38)
Well, the freakout really happened in the public markets. True. Right? And you've seen since April, software stocks have rebounded really, really strongly. But the other thing that you notice, and this is really about public investor sentiment, is that whenever there's an announcement about one of the great LLMs coming out with an amazing model like today, the whole software industry doesn't collapse or react to it. A big place where you saw the freakout, as you called it, be completely over, is where we invest 50% of our dollars in cyber.
This is a huge tailwind to cyber, and that's one of the sectors that has rebounded really strongly over the past month.

**Dani Burger** (3:16)
What about in lending? What are the conversations with your lenders like? I remember we had a conversation saying the cost of capital has gone a little bit higher because of concerns. Has that come back down, or are there still difficult conversations to be had?

**Orlando Bravo** (3:27)
Lending is very difficult because, and I'm going to be completely upfront about this, there are many large asset managers that need to raise so much money monthly, and from retail, and it's not the most popular thing right now to pile that money into software.
So it is a much tighter environment. Now on the buy side, of course, that hurts you with financing, but it means you pay a lot less. And funds like ours, we do a lot better in down markets than in up markets because we're value investors, so we're really enjoying this opportunity, but once again, we're treading carefully because we want to buy companies that are part of the future, not companies that are stuck in the past.