Why YC Predicts Vertical AI Agents Will Be 10X Bigger than Saas

SaaS Created 300 Unicorns. YC Predicts Vertical AI Agents Will Be 10X Bigger.

In the past 20 years, SaaS companies captured 40% of VC funding and created 300+ unicorns. But YC thinks that's nothing compared to what's coming with vertical AI agents.

Here's why they're betting the next wave of billion-dollar companies won't just replace software - they'll replace entire teams:

Their latest conversation made it so clear - Vertical AI agents are at the perfect timing to outscale SaaS by 10X.

Here's the top 5 points that build up this excitement:

1️⃣ We’re at an Inflection Point

"Every 3 months, things get progressively better. Now, we’re talking about vertical AI agents that could replace entire teams and functions."

Vertical AI agents don’t just automate—they specialize, adapting to specific industries like healthcare, finance, or logistics.

The best part? OpenAI's monopoly is ending.

Growing competition between foundational LLM companies is creating fertile ground for innovation.

2️⃣ History Repeats Itself

2005: "No one believed enterprise software could work in a browser."

2024: "No one believes AI can handle complex business tasks."

SaaS proved the skeptics wrong then.

Today, there's a similar disbelief around AI agents.

Vertical AI is about to do the same.

3️⃣ The Scale of Opportunity

Over the last 20 years:

✔️ SaaS captured 40% of all VC funding.
✔️ Created 300+ unicorns.
✔️ Transformed how we work.

YC's prediction?

Vertical AI will be even bigger, with multiple $300B+ companies emerging in this space.

"Imagine that for every SaaS unicorn, there will be a vertical AI agent unicorn."

Dig deep enough, and you’ll uncover billion-dollar startups waiting to emerge.

4️⃣ Why This Time Is Different

Traditional SaaS companies need thousands of employees to scale. But vertical AI companies can do more with far fewer people.

Even more disruptive is this:

These agents don't just cut software costs—they cut payroll expenses (a far larger line item for enterprises).

"In SaaS, you need people to do everything. With vertical AI agents, you'll get software that also eliminates much of the payroll required to operate it."

5️⃣ Where To Look

The biggest opportunities? Look for boring, repetitive admin work.

As one YC partner put it: "If you dig deep enough into these problems, there's likely a billion-dollar AI agent startup waiting to be built."

Working in automation for 3+ years, and building agents for companies in Overdrive, I see new cases of highly-automatable repetitive work daily.

Build that awareness for yourself:
→ Talk to customers.
→ Immerse yourself in the industries you want to innovate in.

And please, please...

SEE THE BIG PICTURE!!! 🙏 

The real opportunity isn't in flashy consumer AI.

While YouTube, Twitter, and LinkedIn continue to buzz arround ChatGPT, shiny new LLMs and consumer AI, the real transformation is happening in vertical B2B applications of agents.

Just like SaaS, the winners will solve specific industry challenges at scale—and 2025 will be the year this landscape takes form.

Which industries are embracing this shift first?

🔖 Tag your your favorite Vertical AI Agent company in the comments (with the industry they're working on)!

Which YC Companies Are Disrupting Saas?

We mapped out YC S24 batch.

It includes all public YC information about each startup, including the founders, their companies, industries and their LinkedIn profile.

It’s a no brainer for:

💼 VCs → Discover the hottest startups.

🔍 SDRs → Spot who's hiring and scaling fast.

👨‍💻 Job Seekers → See where the next big tech opportunities are.

Get Access to the YC Startup Dashboard here ▶️