Leonis Capital Closes $25M Fund II to Back AI Builders

A completely subscribed fund backed by establishments and AI researchers, constructed to take a position early in founders with deep technical conviction.

SAN FRANCISCO, CALIFORNIA / ACCESS Newswire / September 16, 2025 / Leonis Capital introduced its absolutely subscribed Fund II of $25M. The fund is backed by institutional LPs and a various mixture of operators and founders within the AI trade that features FoFs, foundations, in addition to researchers and executives from Nvidia, OpenAI, and Anthropic. This comes three years after elevating Fund I, reflecting the agency’s regular momentum and robust efficiency. “Fund II represents a significant milestone in our evolution from a specialised boutique to constructing an institutional-grade funding platform investing in one of the vital vital industries (in AI) of our lifetime,” says Jay Zhao, Managing Accomplice at Leonis Capital.

Leonis Capital was based by Jay Zhao, who spent over a decade as a enterprise investor, investing in enterprise, cellular, fintech, and cloud. He has invested in 11 unicorns, with 3 of these firms going public. Zhao and his earlier fund had been early backers of Marqeta, the main fintech firm that powers the “on-demand financial system” like DoorDash and Uber, and in the end served on its board earlier than the corporate went public. As well as, Zhao additionally backed unicorns like Lime and Workboard because the early days.

In 2020, Zhao noticed that almost all enterprise funds had been more and more chasing rounds and clout whereas over-indexing on consensus signaling as a substitute of first-principles considering. “I assumed most enterprise companies had been lacking the mark on figuring out the following wave of transformative AI firms as a result of they had been changing into disconnected from the technical fundamentals of a enterprise, main them to probably overlook probably the most progressive builders,” says Zhao. He believed that to construct an intergenerational agency investing in AI, the agency wanted to be structurally technical and research-driven, able to making early contrarian bets based mostly on deep technical understanding reasonably than market momentum.

To understand this imaginative and prescient, Zhao teamed up with Jenny Xiao, who was beforehand an early worker and researcher at OpenAI and acquired her PhD from Columbia College. Zhao brings the institutional funding self-discipline and company-building expertise of a seasoned enterprise investor, whereas Xiao brings the technical depth and analysis mindset important for figuring out real breakthroughs in synthetic intelligence. As well as, Leonis additionally has 8 analysis fellows that features PhDs and researchers from Stanford, MIT, Berkeley, Harvard, and so on, serving to the agency in advancing elementary analysis.

“We don’t simply discuss applied sciences, we immerse ourselves in them,” explains Xiao. By means of their research-driven method, Leonis Capital is ready to generalize their learnings right into a thesis-driven method that’s regularly evolving because the AI panorama modifications. The agency recurrently publishes comprehensive analysis and research pieces which are extensively circulated amongst Silicon Valley AI founders, VCs, and researchers. A few of their extra notable works embody their “Zero or Hero” essay, a ten,000-plus-word evaluation that outlines how the agency values foundation models and AI applications, distinguishing between incremental enhancements and real breakthroughs, and their 40+ page report profiling OpenAI’s evolution from a non-profit analysis lab to the “The whole lot Platform” in AI. Their method feels extra like educational researchers growing and testing hypotheses than conventional VCs chasing offers.

“The Leonis workforce has clear and well-thought-out concepts about the place AI goes and why. That stands out in an trade that’s generally susceptible to hype chasing as a substitute of deep considering,” stated Todor Markov, an early OpenAI researcher now at Anthropic, and in addition at Leonis Capital LP.

The agency’s research-driven method has already yielded spectacular ends in its first fund.

Fund I, a 2021 classic fund, is already performing within the prime 1% of enterprise funds in its classic, in keeping with Pitchbook information. The portfolio has already generated notable returns. A few of Fund I’s early bets have additionally achieved unicorn standing, with its greatest hits sitting at 50x – 200x markups and a few portfolio firms have additionally exited to massive tech giants like Nvidia and Google.

Standout investments embody MaintainX, an AI-powered upkeep operations ERP platform that was later backed by Bessemer and Bain Capital Ventures, reaching a $2.5B valuation; Motion AI, an AI-first venture administration platform, has gained important income traction since Leonis’ seed funding and later attracted funding from Sam Altman and Scale Enterprise Companions. Related trajectories apply to different Fund I portfolio firms.

“The Leonis workforce engaged with our AI roadmap at a technical depth that distinguished them from most different VCs now we have interacted with. Their skill to attach technical prospects with market realities helped us construct one thing that’s not simply progressive however commercially viable, the kind of steering we actually recognize,” says Harry Qi, Movement AI’s founder.

Past the spectacular funding outcomes, the Leonis workforce is laying the muse to construct an institutional-grade platform. “For us, Fund II represents a chance to not solely hone our research-driven methodology however to begin enhancing our determination high quality with the newest AI tech stack,” says Zhao. The agency has taken steps to construct inside software program instruments and frameworks that systematize its method at scale. “We’re constructing an AI system that we internally name “Alfa,” skilled on all of our considering, success, studying, and expertise. We anticipate Alfa to enhance over time as we construct out extra expertise, like our proprietary sign monitoring methods that monitor GitHub contributions, educational papers, and analysis convention displays,” explains Xiao. “Programs like Alfa assist us determine promising technical expertise earlier than firm formation, it additionally helps us interact in additional in-depth conversations with technical founders when an vital AI-native constructing block turns into out there for builders (resembling multi-agent workflow, MCP, and so on).”

“What impressed me most about Leonis is how rigorously they suppose,” says Stefano Corazza, Head of AI Analysis at Canva and former Head of AI at Roblox. “As each a researcher and operator, I see their technical depth and thesis-driven self-discipline as uncommon in enterprise, and precisely what the following era of AI founders want.”

Thus far, LPs have been impressed not solely with Leonis’ returns however with the data edge they achieve from the agency’s research-driven method. “Leonis has constructed one of the vital technically subtle funding platforms I’ve seen: deeply technical, methodical in analysis, and unafraid to go early when it counts. From an LP perspective, they’re not simply maintaining with the frontier, they’re serving to outline it,” says serial founder and former AI lead at Nvidia Jeff Tseng, who can also be an LP within the fund.

Zhao and Xiao each perceive how rapidly the AI area is shifting and the way profound and lasting its affect will probably be on society. “With every expertise paradigm shift, there’s a want for a brand new class of capital suppliers, ones who actually perceive the underlying physics of the change,” displays Zhao. “The perfect founders in AI are searching for greater than capital, and as a agency, we see ourselves as the primary companion for technical founders. We lead with conviction, and we’re research-driven at our core. Finally, that’s what it takes to construct a permanent institutional enterprise franchise within the AI period.”

About Leonis Capital: Leonis Capital is a research-driven enterprise agency based mostly in San Francisco, centered on AI-native firms. Since 2021, it has partnered with technical founders on the earliest phases, combining deep technical experience with institutional investing expertise.

SOURCE: Leonis Capital

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