Healthcare AI apps reached $3.7 billion of enterprise spend, up 2.5x, and legal AI $1.8 billion, up 2.8x, Menlo Ventures estimates in 2026: The State of Enterprise AI, published on 3 November. By our arithmetic, the two industries together make up about 54% of Menlo’s $10.1 billion vertical AI market.
Menlo says the report draws on a survey of nearly 400 U.S. enterprise decision-makers responsible for more than $4 billion in AI spending, fielded by Morning Consult from September 8 to 26, 2026. Its dollar figures are estimates of annualized run rate from “a bottoms-up model informed by survey responses, public filings, and third-party reports”. Menlo Ventures is an investor in Anthropic and in vertical AI companies the report names, including OpenEvidence, Legora, Eve and Chai Discovery.
Business Pill · Concentration
A short explainer on concentration: when a few big pieces make most of a total. It teaches the general idea only and does not discuss Menlo’s report or any company in this piece.
The key insight: By our arithmetic, healthcare ($3.7 billion) and legal ($1.8 billion) together make up about 54% of the $10.1 billion vertical AI market Menlo Ventures estimates for 2026.
Menlo defines vertical apps as those built for a single industry and puts the market at $10.1 billion, up 2.9x from $3.5 billion last year.
On healthcare it says: “Healthcare ($3.7B, up 2.5x) still leads every industry category with 37% of vertical spend, and on its own, itโs now bigger than all of vertical AI was last year”.
It credits clinical tools, “led by OpenEvidence at the point of care and ambient scribes like Abridge”. Then: “This year, biology emerged the next frontier, as Anthropic, OpenAI, Isomorphic Labs and Chai Discovery invested heavily in AI for research and drug discovery”.
Menlo puts legal at $1.8 billion, up 2.8x, and says “Harvey and Legora continue to compound as their products moved from drafting help to agents that handle entire workflows, from due diligence to contract review”.
It adds that AI is reaching plaintiff firms, “with platforms like Eve automating demand letters and case preparation”. Menlo’s vertical market map, below, lists Harvey, Legora, Eve, EvenUp and Everlaw among the legal companies; orange outlines on Menlo’s maps mark its portfolio companies.
Horizontal apps serve a function rather than one industry. Menlo says that outside coding and chatbots “they combine for $8.8B (up 3.0x)”, with the fastest growth in “functions that look most like coding”.
It names three: customer support at $2.7 billion, up 4.3x, with Sierra and Decagon; IT at $1.6 billion, up 2.3x, with Serval; and sales at $1.4 billion, up 3.6x, with Clay and Monaco. Its horizontal market map sets each function’s incumbents beside the startups.
As we read Menlo’s numbers, the two largest verticals are ones where work already runs on documents and records, clinical notes in one and contracts and case files in the other.
As we read the report, Menlo frames the next healthcare step as research rather than care delivery: it names biology as the next frontier and lists the labs among the investors there.
Menlo Ventures, 2026: The State of Enterprise AI
“Healthcare ($3.7B, up 2.5x) still leads every industry category with 37% of vertical spend, and on its own, itโs now bigger than all of vertical AI was last year”
Three Implications
FOR HEALTHCARE AI COMPANIES Menlo puts the category at $3.7 billion, up 2.5x, led by clinical tools such as OpenEvidence and Abridge.
FOR LEGAL AI COMPANIES Menlo puts legal at $1.8 billion, up 2.8x, and describes Harvey and Legora moving to agents that handle whole workflows.
FOR THE LABS Menlo lists Anthropic and OpenAI among those that invested heavily in AI for research and drug discovery.
The framework describes “The Verifier Moat โ built by RLVR on domain-specific reward signals, building into a new asset class for reasoning-heavy verticals.”
As we read it, healthcare and legal are the kind of reasoning-heavy verticals the framework has in mind, and Menlo’s figures show they hold the largest shares of vertical AI spend today. The framework is the owner’s argument and does not discuss Menlo’s report.
The dollar figures are Menlo’s estimates of annualized run rate, not revenue reported by the companies named. The report does not give a dollar figure for biology or drug discovery spend, and it does not say how much Anthropic or OpenAI invested there.
The market maps are Menlo’s selection of companies, not a ranking by revenue. Menlo invests in Anthropic and in several of the healthcare, legal and biology companies it names.
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Menlo Ventures estimates healthcare AI at $3.7 billion and legal AI at $1.8 billion, inside a $10.1 billion vertical AI market that grew 2.9x. By our arithmetic, the two industries account for about 54% of vertical AI spend.
A note on sourcing. The figures, chart data and quotes come from Menlo Ventures’ report 2026: The State of Enterprise AI, published on 3 November 2026, and the charts shown are Menlo’s own. Menlo Ventures is an investor in Anthropic and in several companies named here. The one figure labelled our arithmetic is calculated from Menlo’s numbers. We did not contact Menlo or the companies named.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
