Vertical AI is not just another trend, it’s rewriting the rules of how entire industries operate. At N49P, we’ve backed 15+ vertical AI startups since our first bet on EvenUp, and we’ve seen what it takes to build momentum fast, win enterprise trust, and lock in market leadership.
This space is moving at breakneck speed: technology is evolving weekly, customer adoption is accelerating, and the winners are those who deeply understand their industry and execute relentlessly. We’ve developed frameworks and investment approaches that consistently help founders build high-impact companies in this space. This is the first in a series of blog posts in which we share thoughts and hope to spark a conversation with founders and investors building this space.
Two Core Paths, Four Distinct Models
Serving Incumbent / Traditional Businesses
AI Vertical Saas Model
Sell software directly to industry incumbents using proven SaaS playbooks. Strong product, highly variable pricing, minimal headcount and top-tier margins.
Upside: Highest gross margins, fastest to build.
Risks: Declining industry structures, fast-follower pricing pressure.
Example: Quil
Forward Deployed Model
Embed engineers directly into enterprise operations to drive adoption. This hybrid product + services approach accelerates penetration into large clients.
Upside: High ACVs, rapid enterprise buy-in.
Risks: Larger teams, longer sales cycles, blended margins, less capital efficiency.
Example: Maneva
Building AI-First Vertically Integrated Businesses
Full Stack Model
Own the entire customer journey. Direct sales, proprietary tech, brand. Margins exceed industry averages but fixed costs are high.
Upside: Stronger customer lock-in, higher revenue per customer.
Risks: Legal hurdles, capital-intensive brand building.
Buy the End User Model
Acquire existing businesses, then layer AI to drive operational efficiency and margin expansion. Think PE roll-up with an AI engine at its core.
Upside: Immediate revenue, vertical integration, premium margins.
Risks: Expensive acquisitions, integration challenges, brand dilution risk.
Example: Crete Professionals Alliance
What's Missing
Is there a model we are missing? Is the way we view these models wrong. Let us know by commenting below or reaching out to us.
Vertical AI founder and want to discuss what you are building? Reach out to us at alex@n49p.com
