The New Moat That’s Driving Returns in Vertical SaaS

In this episode of Verticals, Luke and Nic sit down with Dave Pandullo and Scott Hoch, General Partners at Frontier Growth and founders of AQL Growth, to unpack where defensibility, and returns, are really coming from in vertical SaaS.

 

The conversation centres on why being a system of record is no longer enough, and how the next wave of value is being created by systems of action, platforms that don’t just store data, but drive decisions, workflows, and execution.

 

Dave and Scott share how they think about:

• Where the real moats are emerging in vertical SaaS and vertical AI
• Why some systems of record are now at risk
• How execution, workflow ownership, and context create defensibility
• What “right to win” actually looks like in niche verticals
• How capital-efficient, growth-stage companies generate strong returns

They also go inside how they’re using AI internally to rethink sourcing, diligence, and decision-making, including building an internal system that encodes investment judgment at scale.

If you’re a founder, operator, or investor building in vertical SaaS or vertical AI, this episode breaks down what’s changing, what still matters, and where the next layer of value is being created.