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The real early-stage Vertical AI opportunity is not only about building smarter agents, it is about designing the systems those agents operate in. If that sounds familiar, it should. Modern AI is running straight into a very old idea in economics, the division of labor. When work is split into specialized roles and coordinated through clear handoffs, productivity rises. Adam Smith’s famous pin factory example remains the canonical illustration of how specialization multiplies output and quality.

AI agents are now reaching the same conclusion through practice. Generalist, do-everything agents can impress in demos, yet they frequently hit limits in real workflows. Context gets bloated, prompts become brittle, and failure modes multiply. The emerging antidote is structure. Define precise roles, give each agent targeted context, and orchestrate the collaboration so that the right work reaches the right expert at the right time.

These are the type of pre/seed startups I’m looking to invest in!

Why structure wins for now

Two forces make structure essential.

First, context is finite. An agent can only consider a bounded working memory at once. Context windows have grown from thousands of tokens to hundreds of thousands in leading systems, but they are still bounded. Bigger windows help, but they do not erase the need for thoughtful context design.

Second, specialization improves throughput and quality. Controlled studies of AI assistance in software development show large gains when the task is well scoped. Microsoft’s experiment on GitHub Copilot found participants completed a programming task about 56 percent faster with the tool, a result echoed in later field studies. The lesson is not that a single giant agent should do everything — it is that well-designed assistants that sit in the right part of the workflow can move the needle.

The winning architecture for startups

The shape of successful systems is becoming clear.

• ⚙️ Specialized subagents. Each subagent focuses on a narrow domain or task. Examples include an intake agent that extracts entities from incoming documents, a quality agent that checks policy compliance, and a reconciliation agent that posts transactions to the ledger. Narrow remit, deep expertise.

• 🔗 Orchestrator agents. An orchestrator coordinates who does what in what order. It routes tasks, monitors progress, handles errors, and composes final outputs. Think of it as the conductor rather than another instrumentalist.

• 📄 Targeted context. Each agent receives exactly what it needs to succeed, nothing more. You avoid context rot, reduce cost, and make behavior more predictable.

This approach already delivers in software engineering. Benchmarks such as SWE-bench, which evaluate whether a system can resolve real issues in real repositories, have seen steady improvement from systems that combine tool use, planning, and modular roles rather than relying on a single monolithic prompt. In practice, multi-agent designs are proving more robust on long tasks that require tool chains, file edits, and tests.

How this maps to early stage Vertical AI

Vertical AI is not a generic chatbot with a logo. It is a set of collaborating agents that map to the grain of the industry. Each industry has repeatable, high-context workflows. Your goal is to replace brittle, human-heavy handoffs with reliable agent handoffs.

Financial operations example.

1. Extraction agent reads invoices and purchase orders.

2. Matching agent reconciles line items and terms.

3. Exception agent asks for approval or additional documentation.

4. Orchestrator posts to the ERP and closes the loop.

Software example.

1. Triage agent clusters issues and links to relevant files.

2. Patch agent proposes diffs scoped to a module.

3. Test agent writes or updates unit tests.

4. Orchestrator runs CI, requests human review for high-risk changes, and merges when green.

Practical design principles

To keep systems reliable as they scale, build around a few simple rules.

• Scope first, then prompt. Write a contract for each agent. Define inputs, outputs, tools, and success criteria. Emojis can even help teams scan the map quickly.

  • 🧩 Role

  • 🛠 Tools

  • 🗃 Required context

  • ✅ Acceptance checks

• Use retrieval, not memory dumps. Even with large windows, fetch only the relevant shards of policy, code, or history. Reference windows are expensive, and irrelevant text increases error rates.

• Prefer tools over prose. Give agents reliable tools for search, retrieval, calculation, and data writes. Tool-augmented systems tend to be more accurate and auditable than free-form prompting alone.

• Instrument everything. Log inputs, outputs, latencies, tool calls, and confidence signals. Feed the data into quality gates that automatically downgrade or escalate when risk increases.

• Keep the human in the loop. Use orchestrators to route edge cases and sensitive actions to people. The highest performing teams pair agents with clear review moments, which matches how Copilot succeeds in development workflows.

What should founders build now…

If you are an early-stage founder, the opening is large and present in almost every domain.

• Pick a narrow, painful workflow that repeats daily inside your target vertical.

• Codify the real handoffs, not the ideal process in a slide. Talk to front-line operators until you can map the exceptions.

• Start with three to five agents wired through an orchestrator and a minimal tool layer.

• Measure resolution time, error rate, and human touches each week.

• Expand by adding specialists, not by bloating a generalist prompt.

• Package the system so it fits the buyer’s world, which means native integrations into the systems of record and clear audit trails.

TL,DR

• 🧠 Intelligence matters, structure compounds it

• 🧩 Specialized subagents do narrow jobs very well

• 🕹 Orchestrators turn many parts into a reliable whole

• 🗂 Targeted context reduces cost and error

• 🧪 Studies already show better throughput and quality when assistance is scoped to the task

We’re making some investments in this space which will share more about soon 😀 

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