Vertical AI: Building the Next Generation of Vertical Software

Our Thesis At a Glance

• For decades, software has primarily existed to digitize manual workflows, with minimal change to the underlying nature of work. Forms and processes moved from paper to screens, increasing efficiency but rarely questioning how work should be done.

• AI changes that premise entirely. Rather than simply translating workflows into digital form, AI has the potential to fundamentally redefine how work is performed. Tools like ChatGPT and Gemini are now used daily across personal and professional contexts—not just supporting workflows, but actively participating in them by collapsing steps, generating outcomes, and reshaping how humans interact with software.

• The result is a dramatic expansion of opportunity: software’s ~$1 trillion market today begins to extend into the $60 trillion global services market. We believe the next—and more difficult—frontier lies in vertical AI software, where deep domain understanding, proprietary data, and close proximity to real-world workflows are required.

• At Aeight Group, we are dedicated to building and backing these companies.

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The Current AI Zeitgeist

The past three years have been defined by an unprecedented concentration of talent, capital, and compute. The world’s most elite engineers are now focused on building frontier AI models, while venture capital underwrites this scarcity through multibillion-dollar raises, pre-revenue valuations, and R&D-first company formation.

At a macro level, research monetization has shifted:

• Old path: taxpayer → academia → research → commercialization

• New path: pension funds → VC → startups → research → direct monetization

This “direct research monetization loop” has enabled frontier labs to raise billions in a race to build superintelligence—and has sparked an explosion of horizontal AI software across several categories:

• Horizontal chat & agents: OpenAI, Gemini, Claude, Devin

• Developer tools: Cursor, Windsurf, Replit, Lovable

• Enterprise search: Glean

• Prosumer automation: Granola, Gamma, AI-driven Excel

• FDE automations: Palantir, Salesforce/ServiceNow/SAP ecosystems

• Voice agents: LiveKit, Retell, Cartesia

• Compliance: Delve

These applications represent only the first wave: broadly applicable, horizontal AI tools that demonstrate what’s possible—but stop short of transforming industry-specific work.

The Next Wave: Vertical AI

The next wave of AI will be vertical.

These applications will be built for specific industries, workflows, and regulatory environments—contexts where generic tools break down and domain expertise is essential. The opportunity is vast: 11 major industries, over 1,000 sub-industries, and countless micro-verticals with bespoke workflows and constraints.

Early examples like Harvey (legal) and Rogo (financial services) hint at what’s possible, but most of the economy remains untouched. These are environments where data is fragmented, workflows are undocumented, and critical knowledge lives in operators’ heads rather than in software.

This is precisely where vertical AI wins—and where the most durable companies will be built.

Our Strategy at Aeight Group

At Aeight Group, we strive to back and build the next generation of vertical AI applications.

We bring experience as both operators and investors in vertical software, with a deep understanding of regulated, workflow-heavy industries. At a moment when frontier AI research is abundantly funded but industry-specific execution remains scarce, we focus on building where the gap is widest: vertical AI.

Our belief is simple: The most enduring vertical AI companies will be built at the intersection of world-class AI engineering and deep industry expertise.

Neither is sufficient on its own. Together, they are transformative.

We are actively aggregating engineers and industry experts to partner through a combination of seed, buy, and build—creating AI-native software designed around how work actually gets done.

A Call to Build—Together

If you are…

• an engineer eager to build AI systems with direct applications

• an owner of a vertical software business exploring how AI can unlock the next phase of growth

• or a seasoned operator in a niche vertical with ideas to automate and reimagine core workflows

...we would love to have a conversation!

Contact J.Y. Chia at jy@aeightgroup.com.

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Special Thanks To: Vedant Khanna (Stanford / Cognition) for his valuable ideas, contributions, and preview of this post