Life would be pretty dull without imagination. In fact, maybe the biggest problem for computers is that they don’t have any.

That’s the belief motivating the founders of Vicarious, an enigmatic AI company backed by some of the most famous and successful names in Silicon Valley. Vicarious is developing a new way of processing data, inspired by the way information seems to flow through the brain. The company’s leaders say this gives computers something akin to imagination, which they hope will help make the machines a lot smarter.

Vicarious is also, essentially, betting against the current boom in AI. Companies including Google, Facebook, Amazon, and Microsoft have made stunning progress in the past few years by feeding huge quantities of data into large neural networks in a process called “deep learning.” When trained on enough examples, for instance, deep-learning systems can learn to recognize a particular face or type of animal with very high accuracy (see “10 Breakthrough Technologies 2013: Deep Learning”). But those neural networks are only very crude approximations of what’s found inside a real brain.

Vicarious has introduced a new kind of neural-network algorithm designed to take into account more of the features that appear in biology. An important one is the ability to picture what the information it’s learned should look like in different scenarios—a kind of artificial imagination. The company’s founders believe a fundamentally different design will be essential if machines are to demonstrate more humanlike intelligence. Computers will have to be able to learn from less data, and to recognize stimuli or concepts more easily.

Despite generating plenty of early excitement, Vicarious has been quiet over the past couple of years. But this year, the company says, it will publish details of its research, and it promises some eye-popping demos that will show just how useful a computer with an imagination could be.

The company’s headquarters don’t exactly seem like the epicenter of a revolution in artificial intelligence. Located a short drive across the San Francisco Bay from Palo Alto Alto (we were asked not to say exactly where), the offices are plain—a stone’s throw from a McDonald’s and a couple of floors up from a dentist. Inside, though, are all the trappings of a vibrant high-tech startup. A dozen or so engineers were hard at work when I visited, several using impressive treadmill desks. Microsoft Kinect 3-D sensors sat on top of some of the engineers’ desks.

D. Scott Phoenix, the company’s 33-year-old CEO, speaks in suitably grandiose terms. “We are really rapidly approaching the amount of computational power we need to be able to do some interesting things in AI,” he told me shortly after I walked through the door. “In 15 years, the fastest computer will do more operations per second than all the neurons in all the brains of all the people who are alive. So we are really close.”

Vicarious is about more than just harnessing more computer power, though. Its mathematical innovations, Phoenix says, will more faithfully mimic the information processing found in the human brain. It’s true enough that the relationship between the neural networks currently used in AI and the neurons, dendrites, and synapses found in a real brain is tenuous at best.

One of the most glaring shortcomings of artificial neural networks, Phoenix says, is that information flows only one way. “If you look at the information flow in a classic neural network, it’s a feed-forward architecture,” he says. “There are actually more feedback connections in the brain than feed-forward connections—so you’re missing more than half of the information flow.”

It’s undeniably alluring to think that imagination—a capability so fundamentally human it sounds almost mystical in a computer—could be the key to the next big advance in AI.

Vicarious has so far shown that its approach can create a visual system capable of surprisingly deft interpretation. In 2013 it showed that the system could solve any captcha (the visual puzzles that are used to prevent spam-bots from signing up for e-mail accounts and the like). As Phoenix explains it, the feedback mechanism built into Vicarious’s system allows it to imagine what a character would look like if it weren’t distorted or partly obscured (see “AI Startup Says It Has Defeated Captchas”).

Phoenix sketched out some of the details of the system at the heart of this approach on a whiteboard. But he is keeping further details quiet until a scientific paper outlining the captcha approach is published later this year.

In principle, this visual system could be put to many other practical uses, like recognizing objects on shelves more accurately or interpreting real-world scenes more intelligently. The founders of Vicarious also say that their approach extends to other, much more complex areas of intelligence, including language and logical reasoning.

Phoenix says his company may give a demo later this year involving robots. And indeed, the job listings on the company’s website include several postings for robotics experts. Currently robots are bad at picking up unfamiliar, oddly arranged, or partly obscured objects, because they have trouble recognizing what they are. “If you look at people who are picking up objects in an Amazon facility, most of the time they aren’t even looking at what they’re doing,” he explains. “And they’re imagining—using their sensory motor simulator—where the object is, and they’re imagining at what point their finger will touch it.”

While Phoenix is the company’s leader, his cofounder, Dileep George, might be considered its technical visionary. George was born in India and received a PhD in electrical engineering from Stanford University, where he turned his attention to neuroscience toward the end of his doctoral studies. In 2005 he cofounded Numenta with Jeff Hawkins, the creator of Palm Computing. But in 2010 George left to pursue his own ideas about the mathematical principles behind information processing in the brain, founding Vicarious with Phoenix the same year.

I bumped into George in the elevator when I first arrived. He is unassuming and speaks quietly, with a thick accent. But he’s also quite matter-of-fact about what seem like very grand objectives.

George explained that imagination could help computers process language by tying words, or symbols, to low-level physical representations of real-world things. In theory, such a system might automatically understand the physical properties of something like water, for example, which would make it better able to discuss the weather. “When I utter a word, you know what it means because you can simulate the concept,” he says.

This ambitious vision for the future of AI has helped Vicarious raise an impressive $72 million so far. Its list of investors also reads like a who’s who of the tech world. Early cash came from Dustin Moskovitz, ex-CTO of Facebook, and Adam D’Angelo, cofounder of Quora. Further funding came from Peter Thiel, Mark Zuckerberg, Jeff Bezos, and Elon Musk.

Many people are itching to see what Vicarious has done beyond beating captchas. “I would love it if they showed us something new this year,” says Oren Etzioni, CEO of the Allen Institute for Artificial Intelligence in Seattle.

In contrast to the likes of Google, Facebook, or Baidu, Vicarious hasn’t published any papers or released any tools that researchers can play with. “The people [involved] are great, and the problems [they are working on] are great,” says Etzioni. “But it’s time to deliver.”

For those who’ve put their money behind Vicarious, the company’s remarkable goals should make the wait well worth it. Even if progress takes a while, the potential payoffs seem so huge that the bet makes sense, says Matt Ocko, a partner at Data Collective, a venture firm that has backed Vicarious. A better machine-learning approach could be applied in just about any industry that handles large amounts of data, he says. “Vicarious sat us down and demonstrated the most credible pathway to reasoning machines that I have ever seen.”

Ocko adds that Vicarious has demonstrated clear evidence it can commercialize what it’s working on. “We approached it with a crapload of intellectual rigor,” he says.

It will certainly be interesting to see if Vicarious can inspire this kind of confidence among other AI researchers and technologists with its papers and demos this year. If it does, then the company could quickly go from one of the hottest prospects in the Valley to one of its fastest-growing businesses.

That’s something the company’s founders would certainly like to imagine.