With that framework in mind, we see two clear opportunities ahead for Vertical AI:
1. New AI-Native Vertical Applications Can Land With a Strong Wedge
There are workflow software incumbents sitting within most major verticals. In some verticals those incumbents are legacy, on-premise providers, whereas other verticals have more contemporary cloud SaaS. In both cases, AI-specific features are still nascent and that creates a window of opportunity for new AI-native vertical applications to emerge.
AI can serve as a powerful wedge into a vertical market because it’s a new technology which buyers and users are receptive to and AI-powered features can deliver automation, which delivers value quickly. If you’re trying to sell a customer their tenth piece of software, there’s less urgency in the buying process. But with everybody clamoring to use AI, technology buyers are receptive to new pitches and experimentation right now.
We are seeing new AI-Native vertical applications emerging across all of the world’s largest sectors but they are particularly becoming prevalent in knowledge work categories where routine processes can be digitized, giving back hours of highly valuable time.
Causaly is an AI-enhanced search platform for biomedical research. Before Causaly, customers at companies like Gilead, Novartis, and Novo Nordisk spent hours searching millions of scientific documents and clinical trial databases to answer complex research questions. Even though software platforms did exist in the space, none had that killer AI-specific feature.
Law firm Allen & Overy recently announced a partnership with Harvey, a vertically focused chatbot which can help lawyers with contract analysis, due diligence, litigation, and regulatory compliance.
Both the biopharmaceutical and the legal industry have existing software vendors serving a variety of functions, but these companies are coming to market with a highly specific and strong wedge which is not currently being served by incumbents in the market.
2. Existing Vertical SaaS Leaders Can Embed AI Functionality
When compared with new AI-native vertical applications, vertical SaaS leaders have the benefit of pre-existing distribution, customer relationships, and proprietary data which startups don’t have access to. We believe this will be a great setup for those who are able to successfully embed AI features and functionality into their platforms.
For example, ServiceTitan launched Titan Intelligence focused on developing AI features including a smart dispatch tool to allow for more intelligent technician routing, local price insights to enable pricing optimization, and AI-enhanced ad budgeting and analytics. With over 100,000 contractors using ServiceTitan across residential and commercial HVAC install, plumbing, electrical, landscaping, pest control, and other verticals, ServiceTitan is well positioned to develop and distribute AI products.
Shopify recently announced AI-Generated product descriptions, which can be generated, revised, or expanded from anywhere on a mobile app. More efficient product description generation will help Shopify’s 2 million merchants transact even more seamlessly with over 560 million unique online shoppers.
Existing vSaaS leaders with high customer affinity have earned the right to extend their platforms into the AI realm.
THIS PIECE WAS ORIGINALLY PUBLISHED IN **TECHCRUNCH.**