According to Fortune, five venture capitalists with funds ranging from $5 million to a massive $25 billion debated the state of AI investing at a live Term Sheet Breakfast in San Francisco. The panel, hosted by Fortune’s Allie Garfinkle, featured Jenny Xiao of Leonsis Capital, Vanessa Larco (formerly of NEA), Rob Biederman of Asymmetric Capital Partners, Aaron Jacobson of NEA, and Daniel Dart of Rock Yard Ventures. Their collective capital deployment over the next decade is expected to be in the tens to hundreds of millions. Views on a potential bubble varied widely, from warnings of overinvestment in infrastructure to predictions of trillion-dollar companies emerging by 2030. The immediate takeaway is that while a correction is expected, the long-term belief in transformative value creation is unanimous.
Bubble or Breakthrough?
So, is it a bubble? Well, it depends on which layer you’re looking at. Jenny Xiao nailed the nuance here. She thinks the bubble is “relatively contained” to the infrastructure layer—you know, the data centers, GPUs, and giant LLM companies soaking up all the cash. But here’s the thing: she argues there’s actually underinvestment in the application layer. That’s the wild part. We’ve built this incredible engine, but we’re still figuring out all the specific, valuable things it can do for real businesses. That gap between hype and practical utility is where the real tension—and opportunity—lies.
Consumer vs. Enterprise Bets
Now, Vanessa Larco threw a fascinating curveball. While everyone runs to “safer” enterprise software, she’s looking at consumer AI. Her logic is pretty compelling. If you give a regular person something that’s radically cheaper, faster, or easier, and they adopt it, you build a brand. And brands are sticky. It’s hard to quit. Enterprise sales are long, complicated slogs with committees and budgets. But winning a consumer’s heart (or just their lazy afternoon) can happen overnight. Is she right? Maybe. It’s a contrarian bet, and those are often where the biggest wins hide.
The Sobering Reality Check
Rob Biederman brought the necessary cold water. His stat says it all: in every boom, 99% or 99.9% of companies fail. One or two become Amazon or Google. The rest vanish. This isn’t speculation; it’s the brutal pattern of technological history. Most companies right now are not systematically creating real value for customers. They’re riding a wave. When the funding cycles turn painful, as Aaron Jacobson predicts they will, those are the ones that disappear. The correction isn’t an “if,” it’s a “when.” But that’s how it’s supposed to work. It’s not a sign the tech is fake; it’s a sign the market is figuring out what’s actually useful.
The Unimaginable Future
And then you have Daniel Dart, who basically said we’re thinking too small. A TAM we can’t yet imagine? Trillion-dollar companies by 2034? He’s not just betting on AI replacing tasks; he’s betting on it creating entirely new categories of service and access. His example of Waymos at elementary schools, not just replacing Ubers, is perfect. It’s about unlocking value in places we don’t even consider commercial today. That’s the “birth of fire” level optimism. Is it overhyped in the near term? Absolutely, just as Jacobson noted. But is it underhyped for the long term? These VCs, with their billions on the line, are betting their careers that it is. The real story isn’t the bubble debate. It’s that the people funding this revolution are planning for a marathon, even if we’re all sprinting right now.
