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- Jenny Xiao of Leonis Capital says there's a lag between AI research and investment trends.
- Xiao, a former OpenAI researcher, aims to bridge venture capital and advanced AI research.
- She urges investors to understand AI's nonlinear progress and to adapt to rapid technology shifts.
There is a yearslong lag in the AI hype cycle, according to one former AI researcher turned venture capitalist.
Jenny Xiao, who cofounded Leonis Capital in 2021 after a stint at OpenAI, said the current investment excitement around AI is far behind the actual research.
"There is a massive disconnect between what researchers are seeing and what investors are seeing," Xiao said on the Fortune Magazine podcast this week.
What's being discussed at the biggest AI conferences is as much as 3 to 5 years behind what researchers are thinking about, Xiao said.
"We are so behind the technical frontier, and that's the gap I really want to bridge," she added.
Xiao, who dropped out of a Ph.D. program in economics and AI to take a researcher role at OpenAI, founded Leonis Capital to bridge the worlds of venture capital and deep academic AI research.
"With AI, there needs to be a new generation of founders. There needs to be a new generation of VCs," she said.
It's also the first time investors need to be able to provide financial support to both the market and the technology, she added. Unlike SaaS companies, which were built on a "stable tech stack," AI is moving fast. To keep up, Xiao said investors are going to need to be as technical as the founders.
If she has one piece of advice for investors who haven't gone deep into the technical side, it's that they should know "AI progress isn't linear," she said.
They should know AI progress happens in "lumps," she said. So, questions about why AI progress is slowing down or speeding up aren't the best way to characterize the rate of development.
"It's neither of those two extremes," she said. "It's somewhere in between."
Leonis Capital did not immediately respond to a request for comment from Business Insider.
