Theory Ventures: Second Fund Closed At $450 Million

By Amit Chowdhry ● Dec 1, 2024

Theory Ventures, a VC firm specializing in early-stage software investments across data, AI, and web3, announced the closing of its $450 million second fund. After the launch of its inaugural $238 million fund in April 2023, this new fund enables the firm to scale its support for innovators utilizing technology discontinuities into go-to-market advantages and building the next generation of software.

From the firm’s founding, Tomasz brought in Lauren DeMeuse (former Palantir exec) to help build an institutional-grade firm from its start. And with decades of operating and investing experience at the intersection of data & AI, Lauren has built Theory’s intelligence team to inform their thesis-driven investment approach, comprising Rafa Jara-Simkin, Looker sales & GTM expert; Amber Mante, Looker & Monte Carlo sales lead; and Arjun Mishra, AI & software engineer / former Googler. Plus, the investment team includes Spencer Farrar, with experience investing in web3, including Mysten Labs, a decacorn in web3, & Andy Triedman, formerly at Innovation Endeavors.

Since its founding, the Theory team has been researching, benchmarking, analyzing, and interviewing private and public companies across the software industry. And through this data-driven research, Theory developed informed perspectives to identify the most promising founders, supporting them from the earliest stages. This fund will focus on the firms’ three key theses:

1.) The Decade of Data – Organizations increasingly utilize data insights, proprietary or otherwise, to generate competitive advantages. And Theory believes that data movement, transformation, analysis, and observability software will underpin leading data applications used across all modern organizations. Theory also recently led a $20 million investment in modern business intelligence software Omni, which is picking up where Looker (acquired by Google) left off by building a modeling layer that evolves with each subsequent query, proving to be a massive step forward for the Decade of Data.

2.) AI as the New Platform – AI automates rote tasks with a high degree of adaptability. And AI has the potential to replace labor spend, a market 15-20 times larger than software budgets. Theory led the $16.8 million Series A in Dropzone AI, developer of AI analysts for security operations teams, which is leveraging machine learning to address the global cybersecurity worker shortage.

3.) Decentralized Infrastructure as Database—Web3 and blockchain technologies will validate the modern banking system and money movement. Stablecoins are the first broadly adopted application in crypto. They process more transaction volume than Visa and hold more US Treasuries than South Korea and Germany. The databases themselves and the software around blockchains will become key components of many software systems. Theory led the $16.5 million Series A in Allium, the leading blockchain data platform for enterprises, including Visa and Stripe.

Since the launch of its first fund, Theory led investments in companies like Context.ai, Initia, Superlinked, and Tobiko Data and opened a new office in San Francisco.

KEY QUOTE:

“I’ve spent my career studying startups—working for two and investing in many, with seven achieving unicorn status. I launched Theory Ventures last year driven by the belief that the rise of AI and transformer architecture, along with the mainstream adoption of crypto and blockchain, present transformative opportunities for startups. With this new fund, we’re excited to accelerate our growth and continue forging long-term partnerships with visionary founders who share our conviction in the potential of these emerging technologies.”

– Tomasz Tunguz, Founder of Theory Ventures

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