Vertical AI unicorns + Big Tech’s spending shift

It’s Tuesday!

Space delivery startup Inversion just raised $44 million to develop small spacecraft for ultra-fast cargo drops—think medicines or drones anywhere on Earth in under an hour. Backed by Spark Capital and Lockheed Martin, it’s aiming for a test flight soon via SpaceX.

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Why vertical AI agents are the next unicorn factory

Forget SaaS—vertical AI agents are the new frontier, and they’re not just tools. They’re built to run whole departments, replacing tedious workflows and saving companies stacks of cash.

Why vertical AI?

Unlike SaaS, which revolutionized software, vertical AI goes deeper—combining software and human-like decision-making to handle everything from customer support to QA testing. These agents aren’t helping you work faster; they’re doing the work for you.

The big sell…

• Save big: AI agents replace humans and software, slashing costs.

• Hyper-focused: While tools like Oracle try to do it all, vertical AI nails specific problems with 10x better solutions.

• Instant impact: Early adopters are seeing results that put SaaS to shame.

Real-world disruptors…

• Outset: Reinventing surveys with AI-powered insights.

• mtic: Automating QA testing so engineers can skip the grunt work.

• SweetSpot: An AI agent that bids on government contracts—no humans needed.

These startups aren’t just building products—they’re erasing inefficiency and reshaping industries.

It’s time to build: If you’ve ever been bored out of your mind doing repetitive tasks, congratulations: you’ve just found your next startup idea. Think payroll, customer support, medical billing—anything soul-sucking is fair game for vertical AI disruption.

The unicorn playbook: Vertical AI agents are already proving they can outpace SaaS, and the competition is heating up. With OpenAI, Anthropic, and others driving innovation, the tools are all there for founders to dive in.

Big tech's new spending strategy

What’s up: Big Tech is ditching flashy acquisitions for cold, hard infrastructure. Capital expenditures—think data centers and AI tools—have doubled this year, while M&A spending is down 56%, thanks to antitrust headaches and AI’s wild pace.

Capex over startups: Why gamble on AI startups that might flame out when you can build the backbone instead? Tech giants are betting on servers and chips to future-proof their dominance. As one Goldman banker put it: “It’s hard to pick winners right now.”

Small players steal the show: While Big Tech sits tight, smaller companies are cashing in. Reddit’s stock has doubled in a month, and Peloton is up 65%. Investors are sniffing out opportunities where Big Tech might start shopping again.

The takeaway: Forget buyouts—Big Tech wants to own the infrastructure game. But as they play it safe, smaller companies are basking in the market’s spotlight. Whether this strategy wins or backfires? That’s the trillion-dollar question.

Trump’s tariffs have hardware startups on edge

The situation: Trump’s proposed tariffs—potentially as high as 60%—are sending shockwaves through hardware startups, especially those relying on Chinese manufacturers. While Big Tech can pivot with lobbying or supply chain gymnastics, startups face a harsher reality: fewer resources, higher costs, and tighter margins.

The hardware startup squeeze…

A tough spot: Hardware startups already operate on razor-thin margins, relying on overseas manufacturers for production. Unlike giants like Apple, which dodged tariffs under Trump’s first term, these startups lack the influence to secure exemptions.

Investor insight: For some startups, tariffs might be the final straw. Venture capitalist Bradley Tusk notes that only truly unique products will survive price hikes. For others, survival may depend on finding alternative suppliers—a costly and time-consuming process.

Big tech vs. startups…

Flexing power: Companies like Tesla and Apple have the budget and clout to influence policy or rework their supply chains. Startups, by contrast, are stuck negotiating small-volume deals with limited leverage.

Scrambling for solutions: Some startups, like LightSource, are advising clients to stockpile inventory now, while others like Overview are diversifying sales to avoid dependence on the U.S. market.

The takeaway: Trump’s tariffs could reshape the hardware landscape, favoring tech giants while squeezing smaller players. For startups without deep pockets or unique products, this could spell consolidation—or collapse.

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