January Ventures co-founder Jennifer Neundorfer stopped by the Equity podcast during TechCrunch Disrupt to chat about fundraising in this very AI-driven market.
Founders and investors alike are obsessed with AI, and even Neundorfer said her firm is looking at ways to use AI to make their work more efficient, such as helping to do due diligence on the market and competition. As for companies being built, she has a preference for the founders looking to create something entirely new.
“Where I tend to get excited is when I see someone who is using AI to do something that isn’t 10x better. It’s actually to create a whole new experience or workflow or behavior,” she said. “That’s what we’re looking at. Less of the incremental changes and more totally new behaviors.”
This is getting harder for founders because fatigue, she said, has hit as more AI ideas start to sound the same.
“Where I think founders are breaking through is when they can communicate to investors why what they’re doing is really different than the other dozens of startups that are doing that and why they are the team to go after that,” she said.
Whether we are in the so-called AI bubble or not, Neundorfer says a market correction is probably coming, and a lot of the companies getting windfalls of investor money now might not survive. The winners will navigate this moment building “truly category-defining companies,” capturing where the tech is going next. “Founders who can stay ahead of that curve, build at the edge of what’s possible today, and build for what’s coming,” she listed. “Founders who are able to really read the market and understand what it is their customer wants versus just building what is possible. Those are the founders that will have an advantage.”
Elsewhere on the pod, she spoke about her life before venture, where she worked at YouTube and 21st Century Fox.
“So much of what I did was meet with people who had great technology,” she recalled of her time at 21st Century Fox. Meeting and talking technology with people was the part of the job that gave her the most joy and helped her realize how much she would probably love working with early-stage founders.
But the learning curve was steep when she decided to transition to investing. In the early days, she said she would constantly check in with founders and give detailed input on their companies.
“That’s appropriate for some cases, but it’s really about the relationship with the founder, supporting not only weighing in on the business, but supporting them as a person,” she said.
Now she’s comfortable in the job. She serves as a mentor for various organizations, such as Techstars, and has made more than 50 investments at January Ventures, according to PitchBook, nabbing some exits in the meantime.
Throughout the conversation, Neundorfer spoke about the changing venture market, funding levels for minorities and women, and about venture markets outside of San Francisco that are seeing success. Her biggest advice to diverse founders right now actually goes for many founders building in this climate: ignore the noise and focus on building a good company.
“Anything else becomes something they can’t control, and the worry isn’t worth it.”