Mapping the impending impact of Vertical AI

AnalysisMar 28, 2024
Vertical AI mapping hero

By Marissa Moore, CFA and Taku Murahwi

At this point, we all know AI is drastically changing many job functions, across many industries. But not all verticals are created equal – and not all verticals are a good fit for tailored AI solutions.

We wanted to take a hype-free, clear-eyed approach to figuring out which verticals were most ready for vertical AI adoption, based on their approach to collecting and sharing data, how unique their workflows are relative to other industries, the importance of personalization and other key indicators. The end result is a map of where we expect vertical AI to have the most impact in the near-term – and where we expect to see startups notch the biggest wins.

Note that this isn’t a rewrite of the thesis we articulated last year in describing our investment approach to this category: It’s an extension or an addendum, and we think the learnings from both complement one another.

Here’s what we believe contributes to “vertical AI-readiness”:

  • Volume and complexity of unstructured, industry-specific data produced

  • A third-party software vendor’s ability to access said data

  • A third-party software vendor’s ability to amass their own proprietary data and then close off access to competitors

  • Uniqueness/industry-specificity with respect to the workflows and jobs to be done

  • Degree of regulatory oversight and burden of compliance

  • Degree of high-stakes decision-making

  • Importance of personalization

  • Prevalence of simulation and synthesis workflows

  • Prevalence of exploratory analysis workflows

  • Importance of creative content generation

For each vertical, we scored it on a scale of 0-100 for each of the above attributes, assigned weights to each attribute, and then weighted-averaged the scores to arrive at an overall score of “vertical AI readiness.”

Chart indicating the relative readiness of a number of industries for adopting AI

This is just a high-level overview of our research and analysis on the subject. If you’re interested in learning more, sign up here to receive the full, in-depth analysis once we're ready to share: