After the initial excitement around large language models and generative AI, a “second wave” of artificial intelligence innovation is now reshaping how startups build products and create value — moving beyond flashy demos toward more deeply integrated and specialised AI offerings. According to Business Insider, founders and investors say the new phase is characterised by tools that solve real business problems, automate workflows, and deliver measurable return on investment rather than simply generating creative outputs.
One key trend in this next phase is the rise of vertical-specific AI solutions. Startups are increasingly focused on sectors like healthcare, finance, legal tech, customer service and logistics, building models trained on domain-specific data that outperform general-purpose systems for targeted use cases. This shift reflects a broader pivot from “AI for everything” toward AI for purpose,” where smaller, specialised agents deliver practical outcomes tailored to industry workflows.
Another major feature of the second wave is the integration of AI into enterprise core systems rather than treating it as a standalone feature. Companies are embedding AI into CRM platforms, enterprise resource planning, HR tools and analytics suites so that AI becomes woven into everyday business operations, boosting productivity and enabling new capabilities such as predictive forecasting and automation of routine tasks.
Investors and founders alike say that this deeper productisation of AI is leading to more sustainable business models. Instead of chasing the latest frontier model, startups are monetising through clear value propositions — such as reducing operating costs, increasing sales conversion, or improving compliance outcomes — and this focus on utility is helping fuel a new surge of funding and acquisitions in the AI startup ecosystem.
