VC Jennifer Neundorfer explains how founders can stand out in a crowded AI market

January Ventures co-founder Jennifer Neundorfer stopped by the Equity podcast during TechCrunch Disrupt to talk about fundraising in this highly AI-driven market.

Founders and investors alike are obsessed with AI, and even Neundorfer said her company is looking at ways to use AI to make their work more efficient, such as helping with market and competitive due diligence. When it comes to companies being built, she has a preference for founders who want to create something completely new.

“What often gets me excited is when I see someone using AI to do something that isn’t 10x better. It’s actually to create an entirely new experience, workflow or behavior,” she said. “That’s what we’re looking at. Less incremental changes and more completely new behavior.”

This is becoming increasingly difficult for founders as fatigue, she says, sets in as more AI ideas start to sound the same.

“Where I think founders break through is when they can communicate to investors why what they’re doing is really different from the other dozens of startups doing it and why they’re the team going after it,” she said.

Whether we’re in the so-called AI bubble or not, Neundorfer says a market correction is likely coming, and many of the companies now receiving windfalls of investor money may not survive. The winners will navigate this moment by building “truly category-defining companies” and capturing where technology is going. “Founders who can stay ahead, build on the edge of what is possible today and build for what is to come,” she summed up. “Founders who can really read the market and understand what their customer wants, rather than just building what is possible. Those are the founders who will have an advantage.”

Elsewhere on the pod, she talked about her pre-corporate life, working at YouTube and 21st Century Fox.

“A big part of what I did was meet people who had great technology,” she recalled of her time at 21st Century Fox. Meeting and talking to people about technology was the part of the job that gave her the most joy and made her realize how much she would love working with early-stage founders.

But the learning curve was steep when she decided to switch to investing. In the beginning, she said she would continually reach out to the founders and provide detailed input on their companies.

“That’s appropriate in some cases, but it’s really about the relationship with the founder, focusing not only on the company, but also on supporting them as a person,” she said.

Now she feels comfortable in her work. She serves as a mentor for several organizations, such as Techstars, and has made more than 50 investments at January Ventures, according to PitchBook, securing a number of exits along the way.

During the conversation, Neundorfer discussed the changing venture capital market, funding levels for minorities and women, and venture capital markets outside of San Francisco that are seeing success. Her biggest piece of advice to several founders right now actually applies to many founders building in this climate: ignore the noise and focus on building a good company.

“Everything else becomes something they have no control over, and the worry isn’t worth it.”