Tola Capital is a venture capital firm that believes in the power of software, data, and AI to transform the way the world works. Launched in 2010 by experienced software operators at the forefront of the rise of cloud computing, the firm backs startups that have enterprise technology experience and are building disruptive and industry-transforming solutions with diverse teams. Pulse 2.0 interviewed Tola Capital co-founder and managing director Sheila Gulati to learn more about the firm.
Sheila Gulati’s Background
Prior to founding Tola Capital in 2010, Gulati spent over a decade at Microsoft where, most recently, she led the company’s enterprise IT strategy and launched the company’s cloud platform, Microsoft Azure, now the company’s largest business at $100 billion in revenue (inclusive of cloud, database, and developer tools). And Gulati said:
“Before that, I held various leadership roles within the Microsoft Developer business unit and spent time on the Corporate Development team where I was responsible for acquisitions and investments.”
Evolution Of Tola Capital’s Thesis
How has your firm’s thesis evolved over time? Gulati noted:
“For the past decade, Tola Capital has been immersed in cloud transformation, investing in cutting-edge enterprise software startups that took advantage of new innovations in digital applications and platforms. The firm sees a similar step-change on the horizon with the AI revolution — one we believe will happen with even more speed and velocity. We are now entering a completely different era of how intelligence works and we are investing in this theme.”
Favorite Memory
What has been your favorite memory working for your firm so far? Gulati reflected:
“Given our history and roles in the advent of cloud computing at Microsoft, we had a deep conviction that cloud computing would change the way the world works. As we started the firm, we leveraged that history to recognize founders with big visions for driving that change. Pulumi is a great example where from the moment we saw the product, we could see how the founders were building software that was meant for cloud architectures and supporting a world where multi-cloud and many-cloud would be the expectation.”
Significant Milestones
What have been some of your firm’s most significant milestones? Gulati cited:
“Our latest $230 million fund brings us to a total of $688 million raised across three funds. We have invested in over 51 companies, and as a result, we have seen over a dozen successful exits.”
Investment Success Stories
After asking Gulati about specific investment success stories? Gulati highlighted:
“Our previous two funds yielded over a dozen exits, including Clipchamp, a video software company acquired by Microsoft; OSIsoft, a data management company acquired by AVEVA; and Hybris, an e-commerce customer tool acquired by SAP.”
Industry Focus
What are some of the industries that your firm is focused on? Gulati noted:
“Tola is largely focused on five thematic investment areas: AI, data infrastructure, security, developer tools, and future of work. At the moment, AI is our main priority.”
Differentiation From Other Firms
What differentiates Tola from other firms? Gulati affirmed:
“Our team is composed of savvy software business builders who are dedicated to helping entrepreneurs build real, enduring enterprise software companies. With decades of experience building platforms, enabling startups, and engaging with a technical audience, our team’s Microsoft heritage gives us a unique perspective on building and scaling enterprise software companies. Also we don’t invest at the foundational level of AI, but more on that next layer, which we call the “enterprise scaffolding” of AI. For example, responsible AI, AI security, and app layer AI.”
Challenges Faced
Has Gulati faced any specific challenges in her sector of work recently? Gulati acknowledged:
“AI has created a tremendous opportunity for seed-stage startups – we see this in terms of AI scaffolding for the enterprise, as well as AI-enabled horizontal and vertical applications. We see tremendous velocity with AI companies and a competitive investment environment. We are also seeing an operational discipline that is expected as companies scale that impacts how capital is deployed and raised in future rounds. This aligns with our investment principles, so it doesn’t shift how we invest.”
Future Goals
What are some of your firm’s future goals? Gulati concluded:
“Following our Fund III, we plan on investing in between 25 and 30 companies globally. Average check sizes will range from $1 million to $4 million for seed-stage companies and $5 million to $15 million for Series A and B. We’re focused on investing in companies characterized by genuine innovation, emphasizing the importance of a strong team, groundbreaking inventions, a sizable addressable market, and a cohesive culture to build an organization that attracts talent. We seek ambitious founders who are committed to building transformative, large-scale businesses, and those unafraid of scaling operations to run multibillion-dollar enterprises.”
