Vertical artificial intelligence (AI) may be one of the few promising areas for venture investors in the next 24–36 months, as niche solutions for different regions and business sectors will generate most of the value in the AI market.
“Vertical AI is created to address challenges in specific industries. Which makes it more promising than horizontal AI, which is mostly considered a general-purpose tool. The latter is powerful and versatile, but as foundation models continue to evolve. Many of them will quickly become obsolete,” says Serhiy Tokarev, founder of the Tokarev Foundation and investor.
What vertical AI can offer businesses
Horizontal services and companies develop large-scale foundation models and operate in an environment of capital concentration. In 2025, about 60% of investments were directed to large AI labs. 90% of these funds went to mega-rounds, concentrated around a small group of companies. Which complicates the building a diversified and scalable strategy for venture funds.
Vertical AI is developing in a healthier investment landscape. Capital is distributed across different areas, and strong competition arises naturally.
Serhiy Tokarev highlights three areas in which vertical AI has already achieved impressive results:
Law
Lawyers spend up to 60% of their time reviewing and processing documents. Vertical AI reduces this burden by automating case analysis, contract drafting, and patent searches, especially for small business services and intellectual property work.
Procurement
Many small and medium-sized businesses still rely on spreadsheets and email. Vertical AI enables smarter planning, faster decision-making, and improved operational efficiency in procurement workflows.
Finance
Vertical AI helps automate accounting and auditing processes, including document verification, control testing, and financial reporting. These tools increase accuracy and reduce manual workload.
According to Serhiy Tokarev, horizontal tools struggle to adapt quickly, and many existing players lag behind. Vertical AI offers a focused and scalable opportunity for venture capital. As these specialised tools evolve, they will become essential across finance, legal, and procurement sectors. The next 2 to 3 years will likely determine the market leaders in this space.
Conclusion
Vertical AI marks a clear shift from broad, general-purpose models toward highly specialised solutions tailored to specific industries. While horizontal AI continues to dominate headlines, its limitations in adaptability and precision create space for more focused innovation. Businesses increasingly demand tools that solve real operational challenges, not just generic tasks, and vertical AI meets that need with efficiency and accuracy.
For investors, this shift opens a more balanced and competitive landscape where value spreads across multiple sectors rather than concentrating in a few dominant players. For businesses, it means access to smarter, more practical tools that integrate directly into workflows.
As adoption accelerates, vertical AI will likely become a core component of modern business infrastructure. The companies that move early and invest wisely in this space will define the next phase of AI-driven growth.
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