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A new cohort of AI startups is skipping the horizontal platform play entirely, building narrow products for single industries - legal discovery, insurance claims, clinical documentation - where domain-specific workflows matter more than general model capability.
Why vertical, why now
Founders in this cohort argue that foundation models have made the underlying intelligence a commodity, shifting the competitive edge to workflow integration, proprietary data, and domain trust - areas horizontal tools struggle to match.
The investor read
Early-stage investors describe evaluating these companies less like typical SaaS bets and more like domain expertise businesses that happen to use AI, with retention and expansion metrics judged against incumbent industry software rather than general AI tools.