Tomasz Tunguz moved to California because of the book, and he got into technology because of raspberries.
Tunguz grew up in a Polish military family — his surname, he says with glee, “comes from the region in Siberia where (his) ancestors were exiled by Nicholas II.” But while living in DC in his early 20s, Tunguz was fascinated by Jack Kerouac On the road and stories about Carmel, Big Sur, and San Francisco.
“I have a background in machine learning and I really wanted to work at Google,” Tunguz said. “I remember when I flew to an interview at Google. They had these cafes where the food was free, and the thing that stood out to me was this huge chafing dish, full of raspberries – and you could eat as many as you wanted. I couldn’t get over this plate of raspberries.”
There’s an honesty in how Tunguz talks about it – these weren’t just raspberries, they were an idea of what life could be that he wanted to explore. Prati: Tunguz has always seemed to be someone fascinated by ideas, and then inclined to test them. He went on to work at Google and later became a VC at Redpoint, where he made a name for himself as an investor in Looker and Kustomer (which were acquired by Alphabet and Meta). Tunguz also developed another distinction, as one of the most memorable early VC bloggers, known for his deep research and, well, his theories. Appropriately then, he named his new company Theory Ventures when he struck out on his own in 2023. Last year, Theory announced its first fund of $238 million. And while that first fund wasn’t fully deployed, recent LP demand has brought Tunguz back into the market: the theory recently erected its second fund of $450 million.
Tunguz, Theory’s founder and general partner, graciously spoke to me about the firm’s new fund after I pulled the news from the filing earlier this month. What surprised him in this first year? First of all, it was not the market he had planned.
“Rounds are up 42% since we started the company,” he said, adding that his financial model suggested rounds would decline after the Federal Reserve raises rates in 2022.
Of course, it all comes back to the boom in artificial intelligence, which has boosted round sizes. It was a double-edged sword—although the round sizes are larger than expected, Tunguz and Theory also use AI. Theory has built in-house software that Tunguz says has “achieved what a team of three or four could previously achieve.”
What is his theory on where the AI boom is right now? Tunguz suggests we’re at a plateau, with big changes on the way, especially for the software giants. His case is this: AI is poised to disrupt the entrenched workflows that major software vendors like Salesforce and Zendesk are built on, leaving them vulnerable. He compares these companies to “ossified” bone-like structures – rigid and unable to quickly adapt to the rapid changes that AI will bring to white-collar work.
“Salesforce, Zendesk, Workday, ServiceNow, all these big companies, I think they’re finally offensive in a way they haven’t been in 20 years,” Tunguz said Wealth.
Tunguz is constantly calibrating what change might look like. Another theory: “I was wondering, will keyboards still have letters in five years?” He thinks it’s reasonably likely that as computers increasingly listen and respond to voice commands for tasks like navigation and summarizing, manual typing will disappear.
The venture capital world is full of theories, and in some sense having a theory is a VC’s job. But Tunguz made me think about why the industry needs its own theories in the first place: to invest early at all, you have to have an eye on the future. Tunguz also knows that he cannot rely on theory alone and says that there must be a balanced relationship between theory and practice. The goal is not perfection, but to be “mostly right” by constantly testing and refining ideas in the mold of the scientific method, he said.
“It’s easy to pontificate about the future and end up in the wrong place if you don’t try the tools, talk to customers, and test them with people who criticize your ideas, who point out flaws,” Tunguz said. Wealth.
So what is unique about Tunguz is not that he has theories, but the public, data-driven honesty with which he presents them. It’s a risk, really. It could be wrong, it could be copied. But there’s a thoughtful transparency—and trust—in Tunguz’s approach.
See you on Monday,
Allie Garfinkle
Twitter: @agarfinks
E-mail: [email protected]
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ENTREPRENEURIAL WORKS
– Lighthousea London-based travel and hospitality insights platform, has raised $370 million in Series C funding from KKR.
– EnvedaBoulder-based AI-based natural compound drug developer has raised $130 million in Series C funding. Kinnevik and FPV led the circle and they joined them Baillie Gifford, Invest awards, Innovation Lingottoand others.
– Flowing windGothenburg, Sweden-based manufacturing facility developer eFuel has raised €44 million ($46 million) in Series C funding. Uniper, HYCAPand Samsung Ventures led the round, and were joined by an existing investor Climate Invest.
– OneRailOrlando-based provider of multi-channel fulfillment solutions, has raised $42 million in Series C funding. Food capital led the circle and joined it eGateway Capital, Florida Opportunity Fundexisting investors Arsenal Growth Equity, Beer capital, Bullpen Capitaland others.
– TailorMedan end-to-end healthcare platform based in New York, has raised $30 million in funding. Windham Capital Partners led the circle and joined it Citi Impact fund, Samsung Next, BrightEdgeand others.
– WordwareSan Francisco-based full-stack AI development operating system has raised $30 million in seed funding. Spark Capital led the circle and joined it Happy, Y-combinator, Activities of the first dayand angel investors.
– Aviz networka San Jose-based provider of AI-driven networking solutions, has raised $17 million in Series A funding. Alter Venture Partners led the circle and joined it Celestica, Qualcomm Venturesand existing investors Cisco Investments, Moment Ventures, Wistronand Accton.
– TeleoPalo Alto-based developer of autonomous heavy equipment technology, has raised $16.2 million in Series A rounds. UP. Partners led the first $9.2 million expansion round, and joined Trousdale Venturesexisting investor F-Prime Capitaland others. UP. Partners he led the second overtime lap and joined him Triatomic capitalexisting investors F-Prime Capital and Trucks Venture Capitaland others.
– Aizen Therapeuticsa San Diego-based maker of biotech mirror peptides, has raised $13 million in seed funding. Madrona led the circle and joined it Wilson Hill and Nearby.
– Aquariumthe San Francisco-based air and water infrastructure developer, has raised $12 million in funding from Mistletoe, Characteristics of the undertaking, The capital of Somaand others.
– AnomalousPalo Alto-based developer of a data quality platform, has raised $10 million in a Series B extension from Smith Point Capital.
– The Crown Affairthe New York-based hair care brand, has raised $9 million in Series B funding. True Beauty Ventures led the round, and was joined by existing investors Selva, Sidekick, 1st stage.
– amigoa New York-based digital cloning platform for service providers, has raised $6.3 million in funding. General catalyst and GSV Ventures led the circle and they joined them Comma Big, CohoVCand angel investors.
– Kodiak HubStockholm-based supplier relationship management platform provider, has raised €6 million ($6.3 million) in funding. Vol led the round, and was joined by an existing investor Scandector.
– revisedSan Antonio-based medical, legal and regulatory solution for reviewing pharmaceutical marketing materials, has raised $4 million in seed funding. LiveOak Ventures led the circle and joined it Eli Lilly, Tau Venturesand Arkin Digital Health.
– DANCE.AIa Boston-based AI biomarker platform for neurological care, has raised $2.6 million in pre-seed funding. LDV capital led the circle and joined it Glasswing Ventures, Leo Lion Company, Duke Capital Partnersand Merck Studio for Digital Sciences.
– SuperScaleThe Bratislava, Slovakia-based game business analytics provider has raised $1.2 million in funding from Stretch investments and existing investors Through private investment, LevelUp Ventures, Zero hundredand Venture to Future Fund.
PRIVATE CAPITAL
– central fieldportfolio company Platinum Equityacquired Brain twitcha social commerce platform based in Pasadena. Financial terms were not disclosed.
– Jones Lake managementwith support Fort Point Capitalacquired Jezerca Lijepaprovider of pond and lake management services based in Medina, Ohio. Financial terms were not disclosed.
– SolomonEdwardsportfolio company Renovus Capital Partnersacquired Dominion Advisory Groupan anti-money laundering and financial crime consulting firm based in Newport Beach, California. Financial terms were not disclosed.
GET OUT
– Dwyer Omega acquired Process Sensing Technologiesprovider of measurement and monitoring solutions for process critical applications based in Ely, England AEA Investors and Battery Ventures. Financial terms were not disclosed.
– Freman capital acquired a majority stake in Rehaneoprovider of outpatient rehabilitation services based in Munich, from Gimv. Financial terms were not disclosed.
THE OTHER
– Accenture acquired Allitixsolutions provider Anaplan based in Irvine, California. Financial terms were not disclosed.
– Vercel acquired Grepcode search engine. Financial terms were not disclosed.
– Wiz acquired Dazza provider of unified security remediation based in Palo Alto. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
– Accel-KKRan investment firm based in Menlo Park, California, has raised $2.2 billion for its first fund focused on secondary investments in the software industry.
– Neos Partnersthe San Diego-based investment firm, has raised $1.4 billion for its second fund focused on energy transition and critical infrastructure.
– The capital of the Blue Bearthe Jackson, Wyo.-based venture capital firm has raised $160 million for its third fund focused on technology companies in the energy, infrastructure and climate sectors.
PEOPLE
– Anzu Partnersthe Washington, DC-based venture and private equity firm, she added Hunter Brown as director. He was previously on Anduril Industries.
– H/L venturesventure capital firm based in New York, promoted Galina Ozgur general partner.
– Welsh, Carson, Anderson & Stowea New York-based private equity firm, she added Bill Bowman, Bala Girisaballaand Lawrence Miller as operating partners. Previously, Sagittarius was on charge, Grisaballa was on Vista Equity Partnersand Miller was on Wilshire.
