$1 Trillion up for grabs 💰

Hi friends,

At Flybridge, we envision an AI-powered future. With over 22 years of funding startups in analytics, infrastructure, and applied AI, we now view AI as the exclusive focus of our investment strategy – the core driver of the next wave of technological transformation.

We recognize AI’s potential from backing pioneering companies early on. An early investment in a company using AI for underwriting. A forward-thinking bet on machine learning for cybersecurity risk management. Vertical AI companies like Aiera, Bowery, and Proscia. Platforms like MongoDB, Firebase, and Stackdriver.

In recent years, AI capabilities have rapidly improved due to increasing data, quicker computing, and new algorithms. Businesses, software engineers, and customers are quickly embracing AI. The possibilities remain largely unexplored.

Flybridge now views AI as our primary investment focus, not just one area. We strongly believe entrepreneurs will create an AI-powered future spanning all industries. The opportunity to support the people leading this change is here and now.

In the first installment of this five-part series, I will break down the first tenet of Flybridge’s Third Wave Thesis. Follow along, share your perspectives, and let me know what founders you’ve found building an AI-powered future.

Part One: AI Native Vertical SaaS

Vertical SaaS companies that deeply integrate AI into their industry-specific offerings have an enormous market opportunity in the coming years. As AI capabilities rapidly advance, there will be significant disruption of traditional software that serves individual verticals. AI-native startups building tailored SaaS products for niche industry segments will capture large shares in these markets.

The key value proposition of AI-native vertical SaaS is providing customized solutions that streamline workflows and surface insights not possible with conventional software. As horizontal AI developer platforms become more widely accessible, the real differentiator is a deep understanding of industry-specific needs. Startups that leverage AI to fundamentally transform workflows in verticals like healthcare, manufacturing, finance, etc. will seize significant revenue opportunities.

For example, an AI-based medical imaging platform can analyze scans with far greater speed and accuracy than human radiologists. This enables faster, more reliable diagnoses. Or an AI recruiting tool can synthesize immense datasets of resumes and job openings to automatically match candidates in a way no manual hiring process could. As AI replaces functions previously performed by humans, AI-native software will deliver entirely new capabilities.

This shift promises to massively disrupt vertical enterprise software, with over $1 trillion in market share up for grabs. Incumbents face mounting pressure from AI-native startups that can deliver 10x or 100x improvements in certain high-value workflows. To stay competitive, legacy vendors need to rebuild their technology stacks around AI.

Many promising startups are driving this vertical AI transformation across sectors. For example, Aiera uses AI to help investors to scale themselves, Finkargo enhances trade financing in Latin America, and Proscia leverages image analysis to combat cancer. More companies will seamlessly incorporate cutting-edge AI customized for their industry needs.

The challenges for this new generation of vertical AI software vendors will be maintaining domain expertise as their platforms expand. Rigorous and unbiased data collection will be critical to building trust. Startups that address these hurdles will be positioned for significant growth in the next decade.

Until next time,

Jesse

Hot Links

🚀 MongoDB for Startups offers free MongoDB Atlas credits, one-on-one technical advice, co-marketing opportunities, and access to their partner network. I’m happy to intro. Learn more.

💼 Chief is hiring a VP of Community Experience. I am confident that this is a once-in-a-lifetime opportunity. Let me know if you or someone you know would be a great fit. Apply here.

👋 Hi, I’m Jesse, a seed-stage VC at Flybridge. If you’re building or investing in an AI-driven future, reply to this email with 1-2 short paragraphs. I’d love to catch up over coffee.