The Rise of Vertical AI | by Paris Heymann | Index Ventures
The Evolution of vSaaSAt Index we have been longtime fans of vertical SaaS (vSaaS) – cloud-based software tailor-made for specific industries.We view the emergence of vSaaS as part of a broader trend of end users increasingly demanding superior technology products. Consumers want solutions-oriented software made specifically to solve their exact business problems. In an environment where we are inundated with software, narrow and specific is well-positioned versus broad and generalized."With the AI Platform Shift upon us, we believe that the next logical iteration of vertical SaaS will be Vertical AI – vertically-focused AI platforms, bundled alongside workflow SaaS, built on top of models which have been uniquely trained on industry-specific datasets."— Paris Heymann, Index VenturesThe concept of verticalization is not new. Even the largest horizontal tech companies verticalize their sales organizations and product features when they have enough scale within each vertical for that to be a sensible approach. Cloud giants AWS, Azure, and GCP prominently feature vertical industry solutions with dedicated sales teams, as do other large platforms like Salesforce, ServiceNow, Snowflake and Workday. These tech leaders verticalize their offerings over time because it’s a high quality experience for customers and end users when a technology vendor deeply understands the industry, has sales and support reps attending the same conferences as users, and is rapidly evolving the product to suit customer needs.With the AI Platform Shift upon us, we believe that the next logical iteration of vertical SaaS will be Vertical AI – vertically-focused AI platforms, bundled alongside workflow SaaS, built on top of models which have been uniquely trained on industry-specific datasets.Why Vertical AI?The AI category is rapidly evolving, but developing into three layers: foundational models, AI infrastructure, and AI applications.