Elon Musk’s minting as a paper trillionaire may have dominated recent headlines, but the defining number of 2026 came elsewhere: by Crunchbase’s count, a new record of roughly $300 billion in venture capital was deployed in a single quarter, with four companies swallowing nearly two-thirds of it. The capital stampeding into frontier models is a testament to investors’ eagerness to buy into the next oligopoly before all the best seats sell out; the sticker prices make Knicks tix look downright bargainous. The winners will no doubt produce juicy multiples, but asymmetric returns are to be found elsewhere as well, not only in the most expensive seats in the house.

Glance a few rows back, to where real industries are actually putting AI to work, and the picture flips. Per Redpoint’s latest market update, horizontal SaaS has repriced down by roughly a third over the past year while vertical software has held essentially flat. The market isn’t fleeing software; it’s drawing a hard line between the generic and the defensible. Anything a foundation model can swallow whole has been marked down to a feature. Meanwhile, software rooted in proprietary data, regulated workflows, and hard-won trust becomes more irreplaceable by the day.

Vertical AI rewards discipline: capital efficiency, deep retention, and healthy unit economics. When the music slows, or stops — as it must eventually — the wrappers get cut as line items, while software platforms that function as industry-specific operating systems grow only more entrenched. When people ask where we’re finding conviction amid all the noise, the answer is unfashionably simple: not the frontier, where the seats are priced for sovereigns, but in unassuming verticals where context-rich, tech-forward founders are focused narrowly on cornering their markets.

Our investments thus far in 2026 continue to bet on those verticals where specialized AI is poised to solve acute pain points. The focus varies, from short-term rentals to sales compensation to tire shops, but the archetype is consistent, with one notable outlier: Nebex, a market infrastructure platform for the space economy, which recently raised a $30M Seed round led by Google Ventures and Eniac Ventures. While our focus remains on Vertical AI, we are ultimately in the business of backing talented founders, and we couldn’t resist the opportunity to back Nebex CEO Tejpaul (Tej) Bhatia at the Pre-Seed and Seed stages as he embarks on a mission to lay the rails for the space economy. Our managing partner Somak Chattopadhyay has known Tej for nearly two decades after meeting him at Startup Leadership Program (SLP), where Somak was a VC teacher and mentor.

Firm Updates & New Investments

• Armory led Besty’s $3.75M Seed 2 round.

• Armory co-led Variabl’s $3.7M Seed round.

• Armory invested in Nebex’s Seed round.

• Armory led two additional Seed rounds (soon to be announced).

Company Updates

• Besty announced their Seed 2 Round in style, with a billboard in Times Square.

• Compyl brought aboard cyber veteran Adam Alessandrini as Head of Sales.

• Tiga went headless, introducing an API-first approach that enables users to supercharge their GTM within existing workflows.

• Variabl completed its rebrand from ZenCentiv as it continues to add market share in the incentive compensation management (ICM) space.

  
  

  
  

Jobs

• Besty is hiring a Head of Finance & Operations, in addition to sales and customer support roles.

• Compyl is hiring a Lead Product Engineer and a Head of Product.

• Heretto is hiring a Customer Issues Developer.

• Motive is hiring across sales, partnerships, engineering, and customer support, with openings in OKC and Seattle in addition to remote roles.

• Thoughtly is hiring across GTM, engineering, and product roles, all based in its NYC office.

• TireTutor is hiring an Implementation Manager based in Boston.

• Qumis is hiring for a number of roles spanning sales, partnerships, growth, and engineering.

About ASV

Armory Square Ventures (ASV) is a venture capital firm based in the Finger Lakes region of New York State, with offices in NYC and Indianapolis. The firm was an early investor in ACV Auctions (NASDAQ:ACVA), Bentobox (acquired by Fiserv), and numerous other high-growth B2B Software companies.

We lead seed and early-stage rounds in B2B SaaS, marketplace, and vertical AI companies and play an active role recruiting talent, customers, and follow-on capital to help our companies scale.

We like to say we are an optimism engine for secondary cities and a community catalyst for regions outside Silicon Valley. As a firm, we are also enriched and nourished by individuals from a range of backgrounds, who are all passionate about uplifting and inspiring growth in cities across the Northeast and Midwest.

• Stage: Seed & Series A

• Location: Management based in New York State and/or other emerging cities across the US

• Check Size: $500k - $3M in the first round with plenty of reserves for follow-on capital

• Business Profile & Model: Software, mobile, or technology-enabled services (emphasis on B2B) with repeatable, recurring, or transaction-based revenue models

• Market: Addressable markets of at least $1B+

• Team: Full-time technical/product leader and sales/marketing leader

• Traction & Unit Economics: Prototype of product deployed with a small sample size of customers; capital efficient

We’re hard at work scouting new investments. If you or someone you know has startup questions, reach out to either Anthony or Jin (emails below). We are actively investing out of our third fund and look forward to sharing more on it as it continues to take shape.

Best wishes in the meantime.

The Armory Square Ventures Team

Get in Touch

Have an opportunity to discuss or want to talk startups?

• Anthony Santaro - anthony@armorysv.com

• Jin Kwon - jin@armorysv.com