The AI startup market spans from companies looking to develop new chips, to those using AI to build robots, to others looking to use AI to create specialized solutions for industry-specific workflows. There are many potential areas that venture capitalists can invest in, but there are clearly some subsectors that they are more excited about than others.
TechCrunch recently polled 20 VCs investing in startups looking to sell to businesses about their predictions for 2025.
Mark Rostick, vice president and senior managing director of Intel Capital, told TechCrunch that now that the big fundamental models are established — at least in his opinion — the next interesting area to invest in is task-specific AI solutions.
“I find models that excel at specific functions particularly interesting, especially when combined with agents built on top of them,” Rostick said. “As AI adoption accelerates, application-focused companies will take center stage as CEOs increasingly look for ways to leverage AI in specific areas that deliver tangible, transformative impact.”
This was echoed by Mike Hayes, managing director of Insight Partners. He added that he would try to support companies that make products that use artificial intelligence to reduce business friction.
“I look for solutions that solve unique, orthogonal business challenges — areas where traditional solutions have failed,” Hayes said. “This includes vertical and human-specific workflows that have been redesigned with GenAI, or automation and security agency innovations that not only detect and warn, but also remediate.”
VCs interested in pursuing companies targeting specific enterprise use cases should make sure these startup solutions are actually companies, as opposed to just features. Otherwise, we could see a repeat of the SaaS boom in 2021, when many companies that were truly unique features raised a lot of venture capital before falling behind in favor of companies that offered platform solutions when the budgets of businesses shrank in 2023.
There are of course tasks that are important enough to warrant a single feature solution. For SaaS, we heard overwhelmingly that businesses would still pay for companies that offer specific cyber security solutions. When it comes to artificial intelligence, the point at which solutions businesses will be willing to pay is still unclear. Ed Sim, founder and general partner of Boldstart Ventures, recognized this challenge.
“The trick is to skate to where the elf is going to be and also think about that being a feature or a product or a business,” Sim said.
Another area that VCs are excited about is reliability and durability. Jason Mendel, an investor at Battery Ventures, said he wants to invest in companies in the observability and reliability space. Liran Grinberg, the co-founder and managing partner at Team8, also has his eye on what he calls “business resilience.”
“The Crowdstrike software update incident showed how fragile our digital world is, not only to cyber attackers but also to mistakes,” Greenberg said. “We need more resilient, anti-fragile digital infrastructure by design.”
AI infrastructure will also remain a hot investment area in 2025. VCs said that with developments around AI agents, they are looking at the infrastructure required for businesses to adopt the technology in addition to companies that can help compute pricing and for AI agents.
“It’s still very early here, and I believe the momentum for AI infrastructure will continue through 2025, particularly as agenting frameworks proliferate, new model models (including reasoning) are developed, cutting edge AI and the UI/UX of AI applications evolve (including computer use),” said Janelle Teng, vice president of Bessemer Venture Partners.
