Vertical AI is one of the most promising areas for investment – tech entrepreneur and investor Serhii Tokarev
Over the next 24–36 months, vertical artificial intelligence (AI) will be one of the most attractive areas for venture investors, as highly specialised solutions for various business sectors will generate most of the value in the AI market over the next few years.
‘Horizontal AI is more of a general-purpose tool that is versatile and powerful. But as foundation models continue to evolve, many of them will become obsolete. Vertical AI solutions, on the other hand, are created for the needs of specific industries to solve clearly defined tasks,’ says the founder of the Tokarev Foundation and investor Serhii Tokarev.
Why vertical artificial intelligence is gaining demand
The tech entrepreneur notes that horizontal services and companies develop large-scale foundation models and operate in an environment of excessive capital concentration. Last year, about 60% of investments went to large AI labs, and 90% of these funds was allocated to mega-rounds, which were concentrated around a small group of companies. This makes it difficult for most venture funds to build a diversified strategy.
Unlike horizontal artificial intelligence, vertical AI is developing in a healthier investment landscape. Capital is distributed across different industries, and strong competition arises naturally due to the deep integration of such solutions into customer processes.
According to Serhii Tokarev, there are currently three industries where vertical AI has already demonstrated its capabilities:
- Procurement. A new niche is opening up in the small and medium-sized business segment. Companies that still work with Excel and email can choose highly specialised AI platforms with smart planning and quick decision support.
- Law. In the legal sector, lawyers have to spend up to 60% of their time working with documents. Vertical AI offers solutions for litigation, small business services, and intellectual property – from contract preparation to automated case analysis.
- Finance. In this sector, investors are looking at audit and accounting solutions that can automate control testing, document verification, and report preparation.
‘As horizontal tools struggle to adapt quickly enough, vertical AI is one of the most promising areas for investment. Therefore, the next 24-36 months will determine the leaders in this category,’ says the founder of the Tokarev Foundation.
According to the tech entrepreneur, such systems will become part of most procurement, financial, and legal processes, as they are a tool that is distinguished by the depth of expertise rather than the scale of capital.