Who will build the next wave of breakout AI companies?

Earlier this month, VC firm Oxx released ‘Who will build the next wave of breakout companies’, a white paper that uses a data-driven approach to analyse the credentials of successful founders between the SaaS era, and the initial wave of AI and machine learning companies. It uses this to consider the question: who will build the future winners?

The research tracks the profile of founders of successful companies through two major waves of innovation: the business to business (B2B) software as a service (SaaS) wave, and the artificial intelligence/machine learning (AI/ML) wave. The research is based on a dataset of 645 founders across 270 successful companies (comprising 150 B2B SaaS companies with $500m+ exits or IPOs, and 120 AI/ML companies which are taking to similar success). 

Founder Profiles

• Between the SaaS wave and the AI/ML wave, the founder PhD rate tripled to 18%. The most striking data point from the research is the number of founders of successful companies that had PhDs, which increased from just 6% in the SaaS wave to 18% in the AI/ML wave. Conversely, the MBA rate dropped from 14% in the SaaS wave to just 4% in the AI/ML wave.
  
  While the PhD may have been relevant for the initial AI/ML wave, however, the indicative data for the most recent subset of the AI/ML wave – i.e. founders of companies in the post-2023 generative and agentic AI era, shows that the PhD rate is trending down and MBAs are unchanged. The indicative post-2023 data shows that the PhD rate for founders of application layer software companies has dropped from 18% to 12%.

Richard Anton, Co-Founder and General Partner, Oxx and author of the whitepaper, commented: “The increase in the rates of PhDs between the SaaS era and the beginning of the AI/ML era makes sense. In the SaaS era, commercial skills were necessary for scaling companies. In the early AI era, technical skills have been a bottleneck to B2B success — these products and technology are genuinely hard to build.” 

Anton explained that the B2B SaaS wave is characterised by subscription-based, sales-led software that produced companies such as Salesforce, Netsuite, Xero and Wix. Companies in the AI/ML wave are those that have AI and machine learning as the foundation of the product, and this includes agentic AI.

Top-Flight Educational Credentials

• Founders attending the world’s top universities jumped from 37% to 61% between the SaaS wave and the AI/ML wave — The whitepaper also revealed a dramatic increase in the number of founders attending the world’s top research institutions (such as MIT, Stanford, Oxford and Cambridge). In the AI/ML wave, 61% of founders attended the top universities, a 24-percentage point increase from the SaaS wave. 

Anton commented: “Not all the founders completed their degrees, but their attendance allowed them to build the right networks, build co-founder relationships and gain investor attention.” 

On the changing profile of founders, Anton commented, “A large part of venture capital is pattern recognition — this will remain critical, however investors need to recognise that the patterns worth recognising are changing, and which signals to look for, in particular when it comes to assessing founder talent.”

Software Focus

• Software leadership shifts towards the UK and continental Europe. The research identifies a massive geographic shift, with the UK’s share of successful companies increasing from 1% in the SaaS wave to 12% in the AI/ML wave. “The UK has done well because of its world-class AI teaching and research at its universities,” commented Anton. And for continental Europe, the share of companies went from 5% to 10% between the SaaS and AI/ML waves, respectively. 

Anton commented: “I’ve been investing in software for 30 years and through various innovation cycles. I could always see that the UK and Europe had immense talent, but the role models and the capital back then were almost exclusively American. That has been eroded and the UK and continental Europe have proven they have the talent, institutions and market complexity to build global winners.” 

Technologists as Founders

• Against a backdrop of changing credentials, technical co-founders remain critical and constant. What the credential shift reveals about the current wave may be the most practically useful finding in the data. If the PhD premium was a function of the technology’s difficulty, and that technology is becoming more accessible, then the credential that matters is shifting again. The current wave may reward something harder to credential than MBAs or PhDs: the ability to see where AI capabilities intersect with real-world problems, move quickly from insight to product, and identify where a defensible position can be carved out. One thing that has remained is the presence of a technical cofounder: even though the specific competencies have changed. 85% of successful SaaS companies have a technical cofounder, and 95% of AI/ML 

Anton commented: “One thing connects both generations is the technical expert. A technical co-founder was present on 85% of SaaS teams, and 95% of AI/ML. One thing remains constant: even if the nature of the technical skill might change, when it comes to co-founding teams, someone needs to be a technical expert”

Summary:

• Oxx whitepaper, Who will build the next wave of breakout companies, uses a data-driven approach to analyse the credentials of successful founders between the SaaS era, and the initial wave of AI and machine learning companies. It uses this to consider the question: who will build the future winners?
• Between the SaaS wave, and the first AI wave, founders with PhDs tripled from 6% to 18%, and founders attending world’s top universities jumped from 37% to 61%. In this period, founders with MBAs decreased, from 14% in the SaaS wave to just 4% in AI/ML 
• However, in the most recent generation of AI founders — of agentic AI companies — indicative data suggests that PhD rates are already in decline, from 18% to 12%
• Across both broad waves, companies are more likely to succeed if they have a technical co-founder. The technical competencies have changed, but the presence of a technical cofounder has remained key: with 85% of successful SaaS companies having had a technical cofounder, and 95% of AI/ML
• At a global level, the UK and continental Europe have increased their share of successful companies: the UK leapt from 1% of successful SaaS companies to 12% of AI/ML based companies. Continental Europe from 5% to 10%.