Remember when AI was just about chatbots and image generation? Those days are behind us. We’re entering the era of agentic AI – where AI systems don’t just respond, they take initiative. And for the services industry, this is a game-changer.
I’ve written about Agentic AI on VC Cafe in May 2024 and specifically about AI agents as the evolution of RPA (robotic process automation) in September 2024. The rapid developments in the AI agent space have meant that there’s better infrastructure enabling founders to build AI-native startups by incorporating existing foundational models and open-source technologies, and the rapid pace of investment into this space has also offered entrepreneurs more nuance as to where are the big opportunities for startups in the agentic AI sector.
In this post, I collated some of the latest research published on Agentic AI, with the aim to share knowledge, primarily with founders, about what can be built in this space. But first, a refresher on what is Agentic AI, how it’s different and why VCs are all of a sudden so excited about it.
What’s Different About Agentic AI?
Agentic AI refers to AI systems that can autonomously manage and execute complex workflows, involving multiple steps and intelligent decision-making. Unlike traditional AI applications, agentic AI systems can assess situations, make decisions, and take actions to achieve goals without constant human intervention.
Think of traditional AI as a powerful but passive tool, like a calculator. Now imagine a proactive assistant that not only crunches numbers but manages your entire financial planning process. That’s agentic AI – systems that can independently execute complex workflows and make decisions.
Real-world example: Sierra’s AI agents can now handle entire customer service conversations, making decisions about refunds, escalations, and follow-ups without constant human oversight. This isn’t just automation; it’s autonomous problem-solving.
VCs see Agentic AI as $4 Trillion Opportunity
“A multi-trillion-dollar opportunity to reimagine software, services, and work”
Insight Partners
A new report by Battery Ventures is calling it the Coming AI Market “Supercycle”. The idea is that AI has the capacity to disrupt software, services, and labor markets across virtually every industry. If you take into account the $2 trillion dollar spend on services, $1.5 trillion dollar spend on labor, $300 billion spend on SaaS and $380 billion spend annually on infrastructure, AI is potentially increasing the TAM of software to $4 Trillion.
The AI Agents market is projected to grow from $5.1 billion in 2024 to $47.1 billion by 2030, representing a CAGR of 44.8%. As a result, VCs aren’t just excited – they’re recalibrating their entire investment thesis around agentic AI. The pie for software businesses has just grown dramatically, and smart money is betting that agentic AI will create more unicorns than mobile or cloud computing did.
But there’s a catch – the rise of agentic AI will likely lead to increased startup formation and venture capital activity, creating a more complex and competitive market. The returns will likely be more concentrated. The stakes are higher, and the technical barriers to entry are substantial.
Here’s where the money is flowing in Agentic AI
October 2024 broke a record in global venture capital deployed, $32 billion in a single month, with AI attracting $12.2B, or 38% of the total funding. Here is where the money is flowing for AI Agent startups:
- AI-First Applications/ Vertical AI: Instead of bolting AI onto existing software, startups are building intelligence-first solutions. Take Harvey AI in legal tech – it’s not just searching documents; it’s drafting contracts, suggesting negotiations strategies, and managing entire case workflows.
- Human-AI Collaboration Platforms: The most promising startups aren’t trying to replace humans – they’re transforming how we work. GitHub’s Copilot doesn’t just write code; it pairs with developers to tackle complex engineering challenges, learning and adapting to each team’s coding style.
- Systems of Agents: Platforms that allow multiple AI agents to collaborate, specialize in tasks, and continuously learn from each other, mirroring human teams. For example, Crew AI provides a framework for managing and deploying multi-agent AI systems, enabling agents to coordinate, interact, and automate tasks efficiently.
- AI Agents for Professional Services: AI agents that automate high-value tasks traditionally done by professionals in fields like sales, customer service, cybersecurity, accounting, and healthcare. A good example is Benchmark-backed 11x, which is building AI digital workers, or in Insurance is Sixfold, which creates an AI copilot for insurance underwriters, ingesting data from various sources to make optimal recommendations.
- AI-Powered Design Tools: Solutions leveraging AI to streamline and enhance design processes in various disciplines, such as:
- Video: AI-powered video generation, editing, and avatar creation tools like Hour One (disclosure: a Remagine Ventures portfolio company)
- 3D Design: Platforms that simplify 3D asset creation, offer collaborative workflows, and enable no-code prototyping. This also includes companies like Echo3D, a DAM for 3D assets that enables viewing of heavy 3D models in the browser (disclosure: a Remagine Ventures portfolio company)
- Web Design: AI-powered website builders with advanced customization options and business-in-the-box functionality. Companies such as Israeli startup Weavy.ai, which caters to professional designers.
Sapphire Ventures created a dedicated landscape for AI powered design tools. There’s a whole range of startups in this space, including open source ComfyUI, which offers developers a powerful design companion.
- Unstructured Data Infrastructure: Technologies for extracting, processing, managing, and storing unstructured data, which is essential for training and fine-tuning agentic AI models
What This Means for Founders
For startup founders, this means a new opportunity to reinvest SaaS by building intelligence-first applications, adopting new design patterns that leverage agentic AI’s capabilities.
The playbook for building successful AI companies is being rewritten. The winners will be those who:
- Own valuable data sources (like Bloomberg does for financial data)
- Solve real labor shortages (particularly in healthcare and professional services)
- Create entirely new service categories with AI at the core (think AI-powered preventive legal counsel)
Looking Ahead
We’re still in the early innings of the agentic AI revolution. The next 18-24 months will be critical as early adopters prove out use cases and business models. For founders and investors willing to bet big on this shift, the opportunity is unprecedented.
But remember: with great power comes great responsibility. The companies that win won’t just have the best technology – they’ll be the ones that address ethical concerns head-on and build trust with both users and regulators.
At Remagine Ventures we’re active deploying in this space. Two of our latest investments in 2024 (still in stealth) are the Agentic AI space: a product manager co-pilot (starting with gaming and consumer apps) as well as an agent-to-agent service for the transactional web. We’re excited to share more about these companies soon. Are you building in the Agentic AI space? I’d love to hear about your experience in the comments below, or reach out to me directly for feedback and support.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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