Vertical Market Analysis

The news that Jones Foods, a U.K. vertical farming company, ceased operations and entered into administration was disappointing, and yet another indication that the indoor farming sector has not yet hit bottom. Adding to the recent negative news about vertical farming in the U.S. (Bowery Farming, Plenty®), the failure of JONES FOODS, INC, which produced leafy salads and herbs like dill, chives and basil, comes on the heels of other European bankruptcies. When companies like Jones Foods and INFARM fail in Europe, it undoubtedly raises concerns about the viability of vertical farms in any part of the world. The U.K. should have been fertile ground for a vertical farming company. For a start, Jones Foods was backed by strategic investor Ocado Group, a leading global, technology business that specializes in ecommerce, fulfilment and logistics in online grocery and distribution industries. In addition, Jones Foods was operating two vertical farms in the U.K., a market where most produce is imported, including over 90% during the winter months, according to the British Retail Consortium. Furthermore, as recently as February 2023, some major U.K. supermarket chains (Aldi UK, Asda, Morrisons and Tesco) capped the amount of fresh produce (tomatoes, peppers, lettuce and raspberries) that customers were permitted to buy due to supply shortages, with a majority of produce coming from Spain and Morocco. While there is significant market opportunity in the UK, indoor growers face major challenges, due to high electricity and labor costs, which could necessitate government support to ensure food security. As I have discussed previously, few vertical farming companies are able to develop profitable business models based on leafy greens. My recommendation to vertical farming companies is to shift from leafy greens to other, high-value products (berries, coffee, forestry/landscaping, microgreens, pharmaceuticals, specialty ingredients), especially in countries with large domestic greenhouses and outdoor farms growing leafy-green. Vertical farms should also focus on growing products experiencing supply chain disruptions and/or likely to face issues growing outdoors in the future due to weather volatility, increasing regulations, higher labor costs, and rising input costs. Vertical farms have an important role to play in agriculture, but most companies first need to figure out the right products to grow to achieve profitability.   https://lnkd.in/gZ3zK4dE EcoTech Capital Cy Obert

𝐇𝐨𝐰 𝐕𝐞𝐫𝐭𝐢𝐜𝐚𝐥 𝐃𝐫𝐚𝐦𝐚 𝐌𝐚𝐤𝐞𝐬 𝐌𝐨𝐧𝐞𝐲: 𝐈𝐧𝐬𝐢𝐝𝐞 𝐭𝐡𝐞 𝐕𝐞𝐫𝐭𝐢𝐜𝐚𝐥 𝐌𝐢𝐜𝐫𝐨𝐝𝐫𝐚𝐦𝐚 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐌𝐨𝐝𝐞𝐥 Vertical drama generated $11B in 2025, but most producers entering the space are playing the wrong game. On the surface, this looks like a content boom: short-form series, fast production cycles, global demand. But when you look at the underlying economics, this isn’t really a content business. It’s a performance marketing business. Some platforms are allocating up to 90% of total budget to user acquisition. A $200K production can sit inside a $2M marketing spend. That changes everything. If the majority of capital is going into acquiring users, not making content, then the real asset isn’t the show, it’s the audience acquisition engine. And that has a direct implication for producers: platforms are unlikely to deploy that level of marketing spend behind IP they don’t control or own. Which is why platforms are producing in-house or commissioning through vendors, co-productions are tightly structured, and pure licensing is limited. Most of the value sits at the platform level, not the production level. China is already showing where this model goes. In the more mature vertical drama market, minimum guarantees often cover production costs, platforms retain control of distribution, and producers participate in upside through revenue share. The model has also shifted toward ad-supported scale. Platforms like ByteDance’s Red Fruit have generated millions in ad revenue share for producers and filmmakers and created a far more structured, and in some ways genuinely independent, vertical drama industry. In other words, producers are not building fully independent film assets. They are plugging into a distribution and monetisation system they don’t control, but can benefit from if they understand how to structure their participation. It’s a very specific kind of opportunity. For production companies, the real question isn’t whether to enter this space, it’s how to do it without becoming a supplier in someone else’s growth machine. You need to understand the model and where it’s heading (China) to know how to develop and produce for it in a way that grows your vertical business. This also raises a another big question I’ve been looking at: How does this compare to what’s happening on YouTube, where producers can own both content and distribution, but monetisation works very differently? I’ll break that down in the next one. Source: https://lnkd.in/dFUHaGaM

The vertical farming market is projected to grow from $7.5 billion in 2025 to $22 billion by 2035. That's an 11.4% CAGR. And it deserves more attention from the people building city economies. Here's what the data is actually telling us. Investors have moved on from the concept phase. The market is now rewarding execution. Building-based vertical farms hold a 58.6% share. Hydroponics leads the process segment at 46.9%. Growth is distributed globally, with China at 15.4%, Germany at 13.1%, the UK at 10.8%, and the U.S. at 9.7%. More than 80% of the U.S. population lives in urban areas. That means the food system was built to serve a distribution model that doesn't match where most people actually live. Vertical farming is a structural correction to that misalignment. The efficiency gains are real. Hydroponic systems use up to 95% less water than traditional agriculture. AI-driven climate control and IoT sensors provide real-time yield optimization. Year-round production removes seasonal dependency entirely. Institutional adoption is already underway. Supermarkets, restaurant groups, and food delivery platforms are actively integrating vertical farms to secure traceable, pesticide-free supply chains. This isn't pilot program territory anymore. What the data doesn't fully capture is the policy gap. The technology is proven. The capital is moving. But cities still need zoning frameworks that recognize agriculture as a legitimate urban land use. Utilities need to price energy for food production competitively. Economic development strategies need to account for vertical farming as infrastructure, not a novelty. The communities that get this right will have a meaningful advantage in food resilience, workforce development, and local economic retention. The future of food isn't just sustainable. It's vertical. And the window for cities to shape how that future gets built is open right now. Source: Farmonaut #VerticalFarming #FoodSystems #UrbanAgriculture #FoodSecurity #AgTech #LocalEconomy #FoodPolicy #SustainableAgriculture #UrbanEconomy #FoodInfrastructure #EconomicDevelopment #CityPlanning

The UAE is building the most advanced vertical farming ecosystem on the planet. It won't be enough. Since the Strait of Hormuz disruption in late February, land freight from Saudi Arabia to the UAE has nearly doubled. Overnight, local vertical farms went from premium niche to logistics lifeline. The sector responded. Fast. The Middle East vertical farming market hit USD 484M in 2026, up 15% year-on-year. The government launched a directive targeting 25% local sourcing across all hotels and restaurants. Emirates Bustanica, Pure Harvest Smart Farms, Madar Farms: all scaling hard. But here's what the headlines miss: ↳ 80% of vertical farm output is lettuce, spinach, or peppers. ↳ UAE cereals: 93% imported. Rice: virtually 100%. Meat: 62%. ↳ Calorie-dense staples (the actual food security problem) are nowhere near economically viable indoors at scale. Yet. The UAE's own target: 50% domestic production by 2051. That's a 25-year runway. And the gap between now and then has to be filled from somewhere. In one week this May, Egypt exported 40,000 tonnes of citrus and 9,000 tonnes of potatoes, with Saudi Arabia among the top destinations. The volumes are there. The urgency (and buyer appetite for reliable, diversified sourcing) is new. Vertical farming is rewriting what's possible in a desert. The question is which problems it's actually solving. Is vertical farming the future of Gulf food security, or just one piece of a much bigger puzzle? #foodSecurity #agrifood #UAE #GCC #verticalfarming #agritech #foodtrade #supplychain #MENA

Perspectives on Vertical AI Vertical AI represents a wide variety of AI-driven applications designed to automate and optimize industry-specific use cases…challenges that previous generations of software have not been able to address. Unlike foundational AI models (horizontal in nature), Vertical AI solutions are purpose-built to seamlessly integrate with existing workflows, enhancing business processes without friction and realizing customer value very quickly. While AI announcements from incumbent SaaS providers get most of the attention in Vertical AI today, behind the scenes are incredible Founders leveraging deep industry knowledge, specialized data sets and workflow expertise to disruptive these incumbents across almost every industry. Why Now? Two years ago, conventional wisdom across the AI / VC world was that foundational models were the only attractive AI investment opportunities. These were considered differentiated / defensible due to the vast technical expertise and CapX required in their production. Conversely, tools leveraging 3rd party LLMs were disparagingly referred to as “Wrappers”…the implication being that they wouldn’t produce sustainable differentiation. How times have changed. Vertical AI applications are increasingly recognized as having the greatest potential for differentiation when paired with a few important innovations: - Proprietary training data: Trained / fine-tuning models on proprietary 1st and 3rd party data enables unique industry and company-specific expertise - Feedback loops: Closed loop systems capture feedback data that is highly differentiated, effective and valuable, creating a virtuous cycle of improvement - Cost reductions: $Bs in CapX on foundational model development has reduced the LLMs cost by ~99% in the last 2 years, increasing viable Vertical AI use cases by 100x - Open-source models: Powerful open-source models now enable privacy-centric vertical use cases Market Expectations Recent market estimates for Vertical AI suggest this is already a $13B market, growing at 25% / year. However, qualitative analysis suggests a much larger near-term opportunity, as Vertical AI can be compared to a more established market – Vertical SaaS. Ironically, Vertical SaaS solutions (subscription SW tailored to industry-specific use cases) were initially referred to as “wrappers” over cloud databases. This critique was short-sighted, as Vertical SaaS is now a massive market on its own, reaching $127B in ’24. There will be a huge amount of overlap between Vertical AI and Vertical SaaS…suggesting that the market opportunity is already much closer to $100B. Going further, Vertical AI will quickly outpace Vertical SaaS due to its understanding of unstructured data and ability to automate repetitive knowledge worker deliverables. $Bs in corporate spend will flow to Vertical AI rather than incremental headcount (while dramatically scaling human productivity). Vertical AI solutions will be everywhere soon.

In agriculture, investments are often fraught with risks associated with price volatility.. however, vertically-integrated farmland presents investors with a unique opportunity to mitigate these risks through diversification and control over the supply chain, not only capturing additional value in processing and packing, but participating in a business that is not exposed to commodity prices and credit risk. Vertically-integrated farmland provides a significant advantage by incorporating further downstream assets (e.g., hulling & shelling, cleaning, drying, packing, processing), which are not tied to commodity prices (i.e., charge a fixed fee), are more predictable, and this mitigate risk exposure typically associated with growing and crop production, which are more uncertain and volatile. While crop yields and prices can vary significantly due to factors like the weather, pests, market trends, interest rates and FX, the costs and revenues associated with downstream processing are more consistent and controllable. This stability is primarily due to the ability to lock in prices / fees charged to the grower, and a highly predictable labor- and real-estate-based cost structure. Advanced technology can also be used to further increase production yields / throughput, further increasing margins. Moreover, there are gains with economies of scale, and by managing multiple stages of the supply chain, these businesses can optimize logistics, reduce transportation costs, streamline operations, and achieve efficiencies and cost savings. This integrated approach also allows for better quality control and traceability of products, which is increasingly important to consumers and can command a premium in the market. The benefit of vertical integration also extends to market responsiveness. These operations can more effectively adjust to market demands and consumer preferences, as they control the entire process from farm to shelf. This agility allows for a more targeted and efficient response to market changes, enhancing competitiveness and profitability. In conclusion, investing in vertically integrated farmland operations offers a strategic advantage in the agricultural sector. The inherent stability and control provided by integrating the processing and packing stages reduce exposure to price volatility, thereby mitigating investment risks. This comprehensive approach to farming not only enhances the stability of revenues but also positions the business for long-term growth and sustainability in an otherwise unpredictable market. #agriculture #privateequity #agtech #agribusiness #agrifoodtech #investing

Want to know why most vertical expansion strategies fail? I've worked with 100+ GTM teams over the past year and the biggest mistake I see them make is throwing darts blindfolded into markets they know nothing about. Let me tell you a counterintuitive approach that actually works for expanding verticals. Don't start from zero—start from your existing ICP. Let’s say you’ve already identified the three to five traits that define your best customers, that’s your ICP. Now, instead of looking for companies that have all or most of those traits, look for ones that have just one or two. You’ll still be anchored to what works—but now you’re widening your surface area. For example, if you sell marketing software to fitness studios and you know your best customers today are: → Boutique gyms with two or three locations → Located in major metro areas → Offering premium-priced memberships → Active on Instagram and TikTok Instead of jumping to something totally different—like restaurants or dental clinics—you start small: → Yoga studios in secondary cities that also offer premium memberships → Single-location gyms that are growing fast and have a strong social presence Track how these new segments perform, spot emerging patterns, and refine your targeting. That’s how you unlock new verticals. The best part is you’re not diving headfirst without knowing how deep the water is. You’re dipping your toes in the shallow end first. If you need help breaking into a new vertical, shoot me a DM. Always happy to help!

Vertical SaaS companies integrating AI into their industry-specific offerings have a $1T opportunity: AI-native startups building SaaS products for niche industry segments will capture large shares in these markets. AI-native vertical SaaS will provide custom solutions that streamline workflows in ways that were never before possible. As horizontal AI developer platforms become more widely accessible, the real differentiator is a deep understanding of industry-specific needs. Startups that leverage AI to transform healthcare, manufacturing, finance, etc. will gain significant revenue opportunities. For example, an AI-based medical imaging platform can analyze scans faster and more accurately than human radiologists. An AI recruiting tool can synthesize large datasets of resumes and job openings to auto-match candidates in a way that a manual hiring process cannot. As AI replaces functions previously performed by humans, AI-first software will deliver entirely net-new capabilities. This shift promises to disrupt vertical enterprise software, with over $1 trillion in market share at stake. Incumbents face pressure from AI-native startups that can deliver 10x improvements. To stay competitive, legacy vendors need to rebuild their stacks around AI. Many startups are driving vertical AI transformation: • Aiera uses AI to help investors scale themselves more efficiently • Finkargo enhances trade financing in LATAM via better risk analysis • Proscia improves diagnoses and treatment decisions for cancer patients New startups will face the challenge of maintaining domain expertise as their platforms expand into new segments. Founders who address this hurdle will be well-positioned for significant growth in the next decade. As startups combine industry know-how with AI-powered software, they can massively disrupt legacy vendors. The $1T opportunity awaits those who understand specific vertical needs and can deliver tailored AI solutions.

The future of AI isn’t general. It’s vertical — and it’s already compounding. Billions are pouring into general-purpose AI tools... and we are rooting for them and use them, like the mindblowingly awesome UX and speed of Perplexity (go Dmitry! and team) Yet overall ... valuations are skyrocketing. Infrastructure costs are enormous. But too many of these tools look and feel the same — a flood of note-taking bots, email assistants, vibe-coding flavors of the day chasing the same surface-level use cases... and the same tech-savvy developers. Meanwhile, something more durable is happening. We’re entering the industrialization phase of AI. And just like with cloud and SaaS, the breakout value is shifting from broad platforms to domain-specific solutions. This is where vertical AI comes in. Purpose-built for sectors like clinical documentation (Abridge), insurance underwriting (Sixfold) , legal (Harvey), and financial analysis (Hebbia). Sectors where workflows are complex, content is regulated, compliance is a must, and differentiation matters. According to Bessemer Venture Partners, vertical AI companies are already: – Growing ~400% year over year – Achieving ~65% gross margins – Capturing ~80% of the contract value of legacy SaaS — with faster adoption And unlike horizontal tools that risk becoming commodities, vertical AI startups are: – Embedded in workflows – Trained on proprietary domain data – Delivering automation with real business outcomes – Building moats in overlooked industries Scale Venture Partners noted that AI is now capable of delivering 25–50% of employee output. That changes the economics of vertical markets — turning previously “too small” categories into massive opportunities. We’re not just seeing the next wave of AI. We’re seeing the replatforming of entire industries. Are you betting on general-purpose AI? Or going deep where AI can actually win?

Want to know the fastest way to get traction in a vertical market? Let me tell you a story. I just watched one of my agency coaching clients discover something that took me years to learn at my last agency. Something so powerful, yet so simple, that it completely changes how fast you can succeed in a new market. It's finding and interviewing your vertical insider. Imagine you're an agency ready to specialize in manufacturing. You could spend months reading industry publications, attending trade shows, and making educated guesses about what matters to your prospects. Or you could spend 30 minutes with a former manufacturing CEO who tells you exactly why they fired their last three marketing agencies. Here's what a vertical insider could be: → A retired C-suite executive from your target industry → A former marketing director who hired agencies like yours → A well-connected industry consultant → A sales veteran who understands the buying process → An operations leader who knows the real pain points What makes these conversations pure gold? These insiders will tell you: → The actual language your prospects use internally → Which metrics drive their decisions (not what you think matters) → Where they look for solutions → Who really makes the buying decisions → What makes them immediately dismiss an agency → The real problems keeping them up at night One of my clients just had this experience in dentistry. In 30 minutes, their insider revealed more about operator decision-making than they would have learned from a year of proposals and lost deals. Think about that. One conversation potentially saved them 12 months of costly trial and error. ⚠️ But here's the thing: Don't just interview them once. Build a relationship. Make them your guide. Your translator. Your bridge to an industry that speaks its own language. Because when you truly understand an industry's inner workings, your marketing stops being about pretty websites and clever campaigns. It becomes about solving real problems that matter. --------------------------- Hi! I'm Corey Quinn 🎯 🚫 Don’t let an algorithm decide what you read! Join hundreds of readers who get my daily growth tips.   ⬆️ Click "Visit my website" under my name to subscribe