w
Welcome to TechCrunch Exchange, a weekly startup-marketing newsletter. It was inspired by the daily TechCrunch + column from which it got its name. Want this in your inbox every Saturday? Sign up here.
This is a short one workweek in the US, but there is much to read and ponder. For you today, some thoughts on the future of vertical SaaS, what the second half of 2023 holds for Israeli startups, and founder benefit. — Anna
Industry-specific knowledge
Vertical AI is the next logical iteration of vertical SaaS, Index Ventures partner Paris Heymann recently argued at TechCrunch +. In other words, just as companies buy cloud-based software developed for their industry, they will now buy AI applications that use foundational models and infrastructure to meet their business needs.
While some business applications of AI are certainly horizontal, “meaning they can be used by customers in any industry,” Heymann predicts that many AI applications will also be vertical, or industry-focused.
Both horizontal and vertical applications can make businesses more efficient. But according to Heymann, “AI-enhanced software applications will be most powerful when they have deep knowledge of end-user workflows and access to valuable industry-specific training data.”
I tend to agree with Heymann’s take, and some of the examples he mentions are proof that the need is here for vertical AI. For example, the international law firm Allen & Overy recently announced a partnership with Harvey, a startup backed by the OpenAI Startup Fund that puts AI and LLM roles in legal work.
“This is a game-changer that will unleash the power of generative AI to transform the legal industry,” an A&O executive stated.
