twomeows/Moment via Getty Images
Follow ZDNET: Add us as a preferred source on Google.
ZDNET’s key takeaways
- OpenAI and Anthropic, predictably, are getting the most money.
- Four vibe coding companies made the list, signaling a trend.
- The report also revealed several under-the-radar companies.
As hype around AI has skyrocketed in recent years, and the biggest tech companies have reoriented themselves around the technology, there’s also been a profusion of new start-ups that offer their own AI-powered products.
Also: AWS’s new agentic solution is a searchable AI hub for all your enterprise needs
Today, businesses can choose from an almost dizzying variety of AI tools. Those gaining ground above the others in the market signal which kinds of services create real value to businesses.
This is precisely what venture capital firm Andreessen Horowitz, also known as a16z, set out to achieve in its first-ever AI Application Spending Report, which was published last week in collaboration with fintech company Mercury.
The report, which was based on Mercury customer spending data, listed the top 50 AI-native companies that startups have been paying for.
Also: 86% of businesses use AI for this one surprising task, Deloitte finds
“Unlike infrastructure providers, which reflect the capabilities startups are enabling (compute, models, developer tools), these companies show where AI is actually being applied in products and workflows and that distinction matters,” a16z partners Olivia Moore, Marc Andrusko, and Seema Amble wrote in a summary of their findings.
Unsung heroes
No one will be shocked to see that OpenAI and Anthropic landed the first and second spots, respectively, in a16z’s list. A litany of other well-known startups was also featured, including ElevenLabs (#5), Perplexity (#12), Canva (#17), Midjourney (#28), and Grammarly (#22).
More noteworthy, however, are the many names on the list that aren’t as widely recognizable. Getting acquainted with these lesser-known entities can give us a more fine-grained sense of the day-to-day business operations that are currently being automated.
For example, Lorikeet, Retell, and Crisp (#8, #16, #46, respectively) are all AI-powered customer service platforms; Metaview (#19) provides AI-powered support for recruitment; Crosby (#27) is an AI-assisted law firm that helps enterprise customers cut back on the time they ordinarily spend on tedious legal tasks.
You get the idea: Many of the AI tools that are proving to me most useful to businesses, according to a16z’s list, are filling niche roles, automating very specific aspects of businesses’ day-to-day workflows. It’s a trend that echoes a new report from market research firm Forrester, which predicts that we’re entering into a new, “frumpy but functional” era for AI, defined less by grandiose hype than by a widespread use of the technology for mundane functions.
Vibe coding trends
Third place on a16z’s list went to AI coding platform Replit, which last month released its latest agent, designed to help non-programmers write and edit code using natural language prompts, otherwise known as vibe coding.
Also: 3 tips for navigating the AI swarm – 4M models and counting
Three other vibe coding platforms — Cursor (#6), Lovable (#18), and Emergent (#48) — were also featured, signaling a growing presence within enterprises as a proliferation of agentic tools makes it easier to build and deploy custom AI apps. There are still hiccups now and then, like when Replit deleted a company’s entire database, but the technology is getting more dependable, as evidenced by the spending indicated in a16z’s report.
That unfortunate database-deletion incident aside, the report notes that Replit’s higher position in the rankings can probably be attributed to the fact that it “goes beyond front-end design by enabling the development of enterprise-grade, fully functional apps, agents, and automations.” It also offers enterprise safety and governance controls, boosting its appeal among businesses.
Moving forward, the authors note that the vibe coding space could “fragment” into a multiplicity of services offering AI coding agents designed to build different kinds of apps, or it could coalesce into a winner-take-all (or at least take-most) scenario, in which a single platform grows to dominate the enterprise market.
Horizontal vs. vertical
Another key trend that emerged from a16z’s list was an apparently growing prioritization among businesses on “horizontal” applications of AI — that is, on services that can be deployed more or less evenly across an entire company. “Vertical” applications, on the other hand, are those that are designed to be used by a specific job category.
Also: Anthropic’s open-source safety tool found AI models whistleblowing – in all the wrong places
Startups offering horizontal services comprised 60% of the list, whereas the remaining 40% was occupied by those offering vertical services. Some of the notable horizontal names include OpenAI, Anthropic, Perplexity (#12), and Merlin AI (#30). Companies offering AI-powered meeting support also had an outsized presence in this category: Fyxer (#7), Cluely (#26), and Happyscribe (#36), just to name a few.
Want more stories about AI? Sign up for AI Leaderboard, our weekly newsletter.
Intriguingly, a recent study conducted by MIT, which found that 95% of business applications of AI have fallen flat, traced that failure in large measure back to companies taking a top-down approach to the technology. In other words, enforcing a unilateral AI strategy rather than allowing individual employees or teams to experiment and figure out the tools and processes that work best for them was the problem.
Also: Despite AI-related job loss fears, tech hiring holds steady – and here are the most in-demand skills
As for vertical companies, the a16z partners divide them into two buckets: those that assist human teams and those that replace them. Luckily for employees, businesses appear to be prioritizing the former — at least for now.
What it means for hiring
The CEO of Walmart, the largest employee in the world, for example, said recently that while AI will “change literally every job,” his company was committed to avoiding layoffs and upskilling its existing workforce. On a similar note, a recent survey conducted by CRM platform Creatio found that 84% of company executives surveyed said they expect that AI tools, especially agents, will empower rather than replace current employees, and even potentially lead to new jobs.
Business leaders also, of course, have an obvious disincentive to loudly broadcast plans to let go of employees and replace them with AI, so it’s possible that many of these proclamations could turn out to be short-lived PR niceties, and that employers turn out to be more amenable to automation as the technology improves. Time will tell.
Also: AI is more likely to transform your job than replace it, Indeed finds
For the moment, however, a16z’s list suggests that AI-fueled mass layoffs will not be the way of the immediate future.
