How Does the Visual Agentic AI Tool Market End Up? (Part 4 of a 4-Part Series)

In the world of software, you’re in the top three of any market segment or you’re toast. For the near-term, you should expect the continued release of new visual agentic AI tools (VAATs) as they target specific industries, ecosystems, and even use cases. Once the market selects winners, I expect to see consolidation through attrition and roll-ups.

Why do I expect new products to continue to flood the market?

There are a few factors that make this probable:

1.       Hot Market: Companies large and small see how hot the market is, and they are eager to jump in and grab that brass ring.

2.       Technical Leadership: Large companies want to release their own solutions to claim technical leadership, which drives sales across their other product lines. The classic example of this is the auto manufacturer who wins races, then sells a lot of their standard models because they are leaders/winners.

3.       Opportunity: There are many unsolved use cases that will attract entrepreneurs.

4.       Ease of Entry: Leveraging development tools like TeamsFlow, libraries like React Flow, and open source VAATs, companies can build a VAAT quickly.

5.       Standards: Standards for interoperability and access to data and services such as A2A, MCP and others make it easy to fit-in, in an effort to then stand-out.

Let’s analyze why the buyers would want to roll-up smaller companies:

1.       Technology/IP Acquisition: Acquiring innovative technologies, patents, or proprietary software to accelerate product development and gain a competitive edge without the time and cost of internal R&D. This often provides immediate access to breakthroughs that can transform the acquirer's offerings and drive long-term innovation.

2.       Market Leadership: Some companies will buy their way to number one in their segment or, if they are number one, create barriers to others doing the same. As long as you can fairly easily consolidate or rationalize (sell together) the products, this is a great approach. The market leader gets critical mass of brand awareness, resellers, add-on products, etc. It builds their ecosystem and can initiate the Law of Increasing returns or the virtuous flywheel.

3.       Talent Acquisition (Acqui-hiring): Bringing in skilled engineers, developers, or experts from the target company to bolster the acquirer's team. In the software industry, where human capital is crucial, this addresses talent shortages and injects fresh expertise to fuel growth and innovation.

4.       Adjacent Expansion: Add new expertise in an adjacent market. This can be a new territory, complementary tools, common customers, etc.

5.       Customer Base Expansion: Gaining access to the target's established users or clients to rapidly increase market penetration and cross-sell opportunities. This provides an instant boost in user numbers and revenue potential without organic growth efforts.

6.       Synergies: Even with competing products, synergies across functions like sales, marketing, and development can drive economic efficiencies. The acquirer may benefit from reduced costs that further sweeten the adjacent expansion described above.

7.       Defensive Acquisition: Purchasing a company to prevent competitors from acquiring it, thereby protecting market position or blocking potential threats. This is particularly valuable in fast-moving tech sectors to maintain dominance.

8.       Diversification: Entering new product lines or markets to spread risk and create additional revenue streams. In software, this might involve acquiring firms in emerging areas like AI or cloud services to hedge against shifts in core business.

Sellers may have their own motivations, with many seeking a payday or realizing that they have a feature not a standalone product.

Below is the 2025 haul, deals optimizing VAATs for ecosystems while enabling vertical blends. With A2A, these create "virtual roll-ups" across industries.

Sources: Aggregated from platform docs, case studies, and analyst reports like Gartner and Forrester.

With multi-billion dollar acquisitions, entrepreneurs will continue to search for valuable and differentiated niches that can attract big money. Thus far, the acquisitions have focused on general purpose tools (e.g. Datastax/Langflow) and some tools focused on market segments like CRM and HR. While this may continue, I expect another wave of industry-focused acquisitions. For example, large oil & gas companies, e.g. Enverus, will pick-up upstream focused AI companies. This not only buys companies like Enverus products and customers, it buys them expertise, people who can talk AI in their industry.

Consolidation will continue as the big money companies, public and PE-backed, seek to solidify their top three positions in their market segments. Some AI companies may acquire or build upon open-source VAATs. Vertical and industry-focused acquisitions will grow over time. Getting those virtuous cycle flywheels turning is critical to building value. The future looks bright for the VAAT business especially industry-focused tools that can assemble teams with a talent stack that includes AI and industry understanding that they can target at specific high-pain problems.

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