Less than two years after the close of its first fund, Theory Ventures announces new fund to meet growing demand for its data-driven, thesis-based investing in early-stage startups.

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

At the firm’s founding, Tomasz enlisted Lauren DeMeuse, former Palantir exec, to help build an institutional-grade firm from its inception. 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 / ex-Googler. Additionally, the investment team includes Spencer Farrar, with experience investing in web3 including Mysten Labs, a decacorn in web3, & Andy Triedman, formerly at Innovation Endeavors.

Thesis investing is at the core of Theory Ventures’ approach. Since its founding, the Theory team has been studying, benchmarking, analyzing & interviewing private and public companies across the software industry. Through this data-driven research, Theory has developed informed perspectives to identify the most promising founders, supporting them from the earliest stages. This latest fund will focus on the firms’ three key theses:

The Decade of Data: Organizations are increasingly leveraging insights from data, proprietary or otherwise, to generate competitive advantages. Theory believes that data movement, transformation, analysis, and observability software will underpin leading data applications that will be used across all modern organizations. Theory 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.

AI as the New Platform: AI is transforming software. AI automates rote tasks with a high degree of adaptability. The cloud wave created $1.5t of market cap by focusing on software spend. AI has the potential to replace labor spend, a market 15-20x 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.

Decentralized Infrastructure as Database: Web3 and blockchain technologies will underpin the modern banking system & money movement. Stablecoins are the first broadly adopted application in crypto. They process more transaction volume than Visa & hold more US Treasuries than South Korea & Germany. The databases themselves & the software around blockchains will become a key component 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 has also led investments in companies such as Context.ai, Initia, Superlinked, and Tobiko Data, and opened a new office in San Francisco.

"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," said Tomasz Tunguz, Founder of Theory Ventures. "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."

Founders that aim to empower enterprises with go-to-market advantages across AI, data, and Web3 and blockchain can reach out to info@theory.ventures.

About Theory Ventures

Founded in 2023 by Tomasz Tunguz, Theory Ventures is a venture capital firm investing $1-25 million in early-stage software startups across theses in data, AI, and web3, with a focus on companies that leverage technology discontinuities into go-to-market advantages. Learn more at theory.ventures.

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