Retrofitting doesn’t work, as history has proven again and again. Steam engine trains couldn't compete with gas-fueled automobiles, and few companies from the industrial era could thrive in the network economy. Just look at the NASDAQ top 10—–most of them started after broadband became available and consumers fully embraced digital technology. Despite incumbent companies investing trillions of dollars in “'digital transformation,”' the winners of the internet era were digital-native companies. The same will be true for AI. 

I am thrilled to announce the launch of Principal Venture Partners with an inaugural $100M fund. We invest in early stage, AI-native startups that are poised to become the next wave of generational businesses—enterprises that fully embrace new technological capabilities to build lasting impact for decades to come.

Not all AI startups are created equal. For every winner of the internet era were dozens of startups that didn’t survive. What sets PVP apart is the experience and discernment of our investing team. We know a company's business, technology, and talent work together synergistically—not just as separate components. We understand the field's defining concepts and technology from the inside out and have authored seminal research papers. We also bring decades of actual experience scaling up and operating AI-first enterprises, managing international businesses, and applying technology to solve real business challenges. 

Joining me at PVP is Daniela L. Rus, the Director of the MIT Computer Science and Artificial Intelligence Laboratory; Dawn Song, the most-cited scholar in computer security; and Jeremy Nixon, who led research at Google Brain and now runs one of the most influential AI hacker spaces. Together, we have the deep technological expertise to identify the most promising technological advances and the wisdom of seasoned operators who know how to bring a new product to market and advocate for effective AI policy. 

1. The future is born in the lab. 

The majority of companies currently shaping the AI conversation, including OpenAI, started as side projects and research labs. My own work with AI began in the lab, while I was a PhD student at MIT in the 1990s. I still remember one of our labmates who raised eyebrows because he carried a camera and recorder in his pocket that ran 24/7. Though few people realized it at the time, he was conducting one of the earliest experiments in wearable computing. He epitomized one of my favorite technological truths from William Gibson, who observed, “The future is already here—it's just not evenly distributed.” 

At PVP, our mission is to recognize when the future arrives in the lab, then invest to develop and distribute it more evenly for the benefit of all. Through our strategic partnership with AGI House, the world’s most vibrant community of AI builders and developers, we have deep connections to the AI researchers and labs, from MIT to Seoul to Silicon Valley, who are working on the next set of AI breakthroughs that will transform the way we do business, and give us new superpowers to find patterns in massive amounts of data that help us comprehend the world in new and deeper ways. 

2. Gaming is the sandbox for use cases and commercial deployment. 

Technology alone doesn’t make a market-winning product, and games are the perfect sandbox for discovering applications and market innovations: digital worlds with a community of early adopters eager to play with the latest tech and discover what’s possible. The real superpower of a gaming community, as I witnessed time and again at NCSOFT, is to create something greater than the sum of its parts. Cloud, Kubernetes, advanced PCs and microprocessors, NPCs and NLP for gamers, ray tracing and advanced graphics techniques, microtransactions—the list of technologies that gaming adopted before other industries is endless. 

AI is no exception. From designing boss monsters and progressive world generation to personalized storytelling, AI technology in gaming has proved the potential of the technology and revealed practical considerations for decades. Games are where we look first to understand how startups and early adopters are navigating the sea of possibilities presented by the explosive advancement of AI, software, and algorithms. 

3. Policy will be a key factor in who wins the market. 

Maintaining balance and a macro perspective is crucial when investing in AI companies because it is one of the most complex operating and market environments we have yet encountered. Both globally and locally within companies, precedents are currently being written around open source models, AI bias, and hallucinations, and data privacy will shape AI markets for years to come. Unfortunately, much of the discussion around AI regulation is misguided, often limiting innovation and technological development. We need more effective policy that prioritizes workforce retraining to enhance AI literacy, ensuring access to cloud and computing resources so that innovation isn't hindered by lack of infrastructure, and encouraging the brightest minds and talent to participate in innovation.

Our team plays an active role in policy discussions to balance short-term needs with the long-term perspective to create a nurturing environment where innovators, users, and the general population can benefit from advances and move humanity forward. We serve as trusted advisers to global policy groups and governments, including the President’s Council of Advisors on Science and Technology, the UN Secretary General's High Level Advisory Board on AI, RAND, and the Carnegie Endowment for International Peace. Our policy work helps us guide startups through the ever-shifting global policy landscape and advocate for effective and democratic AI policies.

Investing in game-changing companies

A little over two years ago, ChatGPT was released, catalyzing a wave of investment and startups who are overwriting our entire technology stack. On top of the base layer of chips, compute, and foundation models are now a growing set of purpose-built AI tools, orchestration layers, prompt engines, and mutli-agent architectures that are set to revolutionize and completely upend how we work and use technology. 

We are committed to fostering real innovation in its most responsible, impactful, and game-changing iteration and have already invested in a number of companies, including: 

• Laurel, a startup building AI-enabled automation software for law and accounting firms, helps service professionals, knowledge workers, and developers better understand their time usage and effectively collaborate with AI tools to optimize their most precious resources—time and creativity. With Laurel, time tracking and billing are more automated and accurate, and professional firms using the tool have achieved near instant ROI as their throughput increased. While Laurel began as a company focused on professional time-tracking, it is the new AI-driven capabilities to automate professional time management and accountability that recently catapulted Laurel into a Big Four accounting firm. 

• Liquid.ai, a startup developing LLMs based on a new type of neural network, known as a liquid neural network, for enterprise solutions. Their LLM already outperforms models from Microsoft, Meta, and Google, and is poised to revolutionize AI use in fields such as e-commerce, consumer electronics, and biotech.

Transformative technology changes the trajectory of civilization, rewriting markets in the process. With every wave of innovation, the seemingly unbeatable incumbents have been defeated by companies native to that era. AI is the next generational technological leap. We’re excited to invest in more AI-native companies across dev tools, foundational models, middleware, applications, and consumer technology and games companies that have the potential to—like any transformative technology—shape generations to come. 

If you’re building the next generation of AI technology, or interested in investing in it, we’d love to hear from you.

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About Principal Venture Partners

Founded in 2024, PVP is a venture capital firm focused on identifying and nurturing early stage, AI-native startups that will remake entire industries, such as insurance, logistics, and healthcare. The firm’s experience represents a singular mix of game design, AI, business, policy making, and emerging technologies. PVP’s approach is grounded in a genuine passion for the transformative power of AI and a core belief that great technology can create better experiences for all people.