A new generation of Indian startups is turning its focus to vertical AI—artificial intelligence tailored to specific industries—as the next major wave in enterprise technology. Despite a measured pace of adoption by large enterprises, these startups are betting that domain-focused solutions will lead to the next phase of AI growth.
The newly released VIBE50 report highlights 50 emerging vertical AI startups launched by Indian founders. These companies are developing deep-tech solutions across 12 core sectors including healthcare, logistics, manufacturing, and financial services, aiming to seamlessly integrate AI into industry-specific workflows.
This trend comes as global enterprises shift away from generic AI platforms toward specialized tools with clear, measurable business impact. As the report notes, “The next $10 billion outcomes in AI will come from companies solving real workflow problems in specific industries, not from general-purpose platforms.”
However, converting vertical AI’s potential into enterprise-wide deployment remains a significant hurdle. Thiyagarajan Maruthavanan, co-founder at AI accelerator Upekkha, told Business Today, “Surprisingly, even US enterprises are adopting AI slowly. When it comes to deploying AI where multiple people are involved, it’s still a slow grind.”
A major barrier is the so-called “pilot-to-production” gap—where AI initiatives are launched but never scaled. Despite enthusiasm from leadership teams, as many as 90% of enterprise AI pilots fail to transition into full production, Maruthavanan said. This is often due to rapidly evolving technology and hesitation from decision-makers who are waiting for AI to mature further. “Many enterprises are saying: let’s wait another six months—maybe AI will do some new magic,” he added.
This has forced AI startups to go beyond building tools—they must deeply engage with customers to ensure success. “Founders can’t just build the tech and throw it over the fence anymore,” noted Prasanna Krishnamoorthy, Managing Partner at Upekkha.
This changing landscape is also reshaping investor strategies. Shekhar Nair, co-founder and Managing Partner at Upekkha, explained that while the initial hype around generative AI led to confusion, clarity is now emerging around domain-specific applications. “We’re starting to see investors come back, especially those willing to take risks,” Nair said, emphasizing the need for differentiation and defensibility in startup offerings.
Maruthavanan believes vertical AI is on the cusp of transformative breakthroughs. “The dam-breaking moment for developer AI happened in 2023. Our bet is that vertical AI will see those moments in the next one to three years.” He sees India’s engineering talent, affordable R&D, and global market experience as key advantages in leading this next phase of AI evolution.
While challenges remain, India’s vertical AI startups are positioning themselves for global relevance, focused on bridging the gap between technology and tangible enterprise value.
