AI rollups capture the full value of AI
Published: 8/5/2025
What is an AI rollup?
An AI Rollup is a startup that develops proprietary AI technology while simultaneously acquiring and modernizing traditional services businesses by deeply integrating AI. Acquisition targets are typically found in fragmented, high-revenue, low-margin, knowledge-intensive sectors resistant to adopting new technology, yet maintaining sticky customer relationships.
The challenges with simply selling AI software to these businesses are:
- In many cases, an “AI native re-engineering” is necessary to capture the full potential of AI. Most likely, due to entrenched habits and knowledge gaps - they will be unlikely to try this themselves and it will be difficult to pull off if they do try.
- Selling AI software to these businesses does not capture the full value it creates. In an AI native re-engineered accounting firm, AI might enable each accountant to do the work of three. It will be very difficult to charge software fees in proportion to the value created.
- Software is being commoditized and hyper-competitive - those who own the distribution can benefit from hyper-competition instead of suffering from it.
By owning the end customer and distribution, the full value-lift of AI is captured, AI can be pushed through ops faster (and deeper) and a lasting competitive advantage can be created. Agents and models can be customized by using centralized proprietary operational data. This, in combination with an AI native re-engineering, will also bring the ability to outcompete services businesses with AI “bolted on” (i.e. a services business simply buying AI software).
An AI rollup can create a compounding rollup loop by expanding the gross margin of the acquisitions and using the extra cash flow to buy more businesses. It’s possible that with less than $10M in equity, a +$1B company can be built.
Some examples of companies doing this already
| Company | Vertical | Founded | Backing | Notes |
|---|---|---|---|---|
| Crete Professionals Alliance | Accounting | 2023 | >$500m / Thrive, Bessemer | 20+ firms; 900+ employees |
| Accrual | Accounting | 2024 | $16M / General Catalyst | Founded by ex-Brex CTO |
| Crescendo | Contact centers | 2024 | $50M / General Catalyst | |
| Multiplier Holdings | Accounting / tax | 2022–25 | $27.5M / Lightspeed | Bought Citrine International Tax; doubled margins via AI. Founder ex-Stripe |
.. a lot more examples here
My take
I'm excited about the rise of AI rollups. There's something uniquely compelling about combining LLMs and AI agents with the stable, cash-flow-positive foundation of traditional businesses. By directly owning these companies rather than simply selling software to them, AI rollups capture far more value. In the accounting example - the owners of the business will capture the full value when one accountant does the work of three.
Beyond just improving margins, I anticipate significant opportunities to boost revenue by "layer-caking" new services. For example, accounting-focused rollups could rapidly launch related offerings such as insurance brokerage, invoice factoring, lending products, or specialized card services. The lowered barriers provided by AI enabled development (the same force driving commoditization) mean cross-selling and upselling become dramatically easier and more scalable.
However, executing successfully on this strategy is probably challenging. Effectively managing an AI rollup involves simultaneously operating two distinct businesses: a high-tech AI development firm and an operationally-intensive, private equity-style company that specializes in acquiring and integrating multiple smaller businesses. This dual nature demands a rare combination of skills within the founding team; deep technical expertise in AI + robust M&A and financial acumen and seasoned operational leadership capable of driving meaningful (AI) transformation. Change management is often underestimated, in my experience.
Traditional venture capital may also struggle with the fit here. Standard VC fund structures typically target rapid, boom or bust investments, exponential returns, whereas AI rollups generate value more steadily through operational improvements and compounding cash flow. While they may not align perfectly with traditional VC models, AI rollups still represent extremely attractive investment opportunities.
Scaling quickly by acquiring many small businesses presents additional challenges. Deep, rapid AI-driven transformation will probably be most effective in smaller organizations (around 20 employees or fewer), meaning rollups must pursue a high quantity of acquisitions, each requiring due diligence, integration, and careful management.
Looking ahead, I agree with those calling AI rollups a new asset class and see entirely new business models emerging. Companies like the examples mentioned above are paving the way. Also, companies like YC-backed Rocketable, which acquire and fully automate multiple micro-SaaS businesses, illustrate the potential of broader, non-vertical-specific plays.
What to read on this topic
Elad Gil on AI rollups | TechCrunch
VCs adopt PE-style rollups | Financial Times (archived)
The Dawn of AI rollups | Vinay Iyengar
Crete to spend $500M on AI rollup | Reuters
VCs eye accounting firms with AI | WSJ (archived)
AI rollups — critical view | (archived)
Turning customers into investments | Evan Lyseng (Substack)
AI rollups revisited | Evan Lyseng (Substack)
AI rollups thesis deck | DocSend
How to do an AI-enabled rollup | Forgepoint Capital