Tomasz Tunguz moved to California due to a guide, and he bought into tech due to raspberries.
Tunguz grew up in a Polish navy household—his final identify, he says with mirth, “comes from the region in Siberia where [his] ancestors were exiled by Nicholas II.” However whereas residing in D.C. in his early 20s, Tunguz was entranced by Jack Kerouac’s On the Highway and tales of Carmel, Massive Sur, and San Francisco.
“I have a machine learning background, and I really wanted to work at Google,” stated Tunguz. “I remember when I flew out to go interview at Google. They had these cafes where the food was free, and what stood out to me was this huge chafing dish, full of raspberries—and you could have as many of them as you wanted. I could not get over this plate of raspberries.”
There’s sincerity in how Tunguz talks about it—they weren’t simply raspberries, they had been an concept about what life could possibly be that he wished to analyze. It tracks: Tunguz has seemingly at all times been somebody entranced by concepts, after which inclined to check them. He’d go on to work at Google, and later grew to become a VC at Redpoint, the place he made his identify as an investor in Looker and Kustomer (acquired by Alphabet and Meta, respectively). Tunguz additionally developed one other distinction, as probably the most memorable early VC bloggers, recognized for his deep analysis and, properly, his theories. Appropriately then, he named his new agency Concept Ventures when he struck out on his personal in 2023. Final 12 months, Concept introduced its first fund at $238 million. And although that first fund isn’t totally deployed, latest LP demand despatched Tunguz again to {the marketplace}: Concept not too long ago raised its second fund at $450 million.
Tunguz, Concept founder and basic companion, kindly spoke to me concerning the agency’s new fund after I scooped the information from a submitting earlier this month. What shocked him on this first 12 months? It hasn’t been {the marketplace} he deliberate for, for one factor.
“Round sizes are up 42% since we started the firm,” he stated, including that his monetary mannequin had steered spherical sizes would lower after the Federal Reserve raised charges in 2022.
Naturally, all of it goes again to the AI increase, which has been bolstering spherical sizes. It’s been a double-edged sword—although spherical sizes are larger than anticipated, Tunguz and Concept have additionally been utilizing AI themselves. Concept has constructed inner software program that Tunguz says “has accomplished what a team of three or four might have before.”
What’s his idea on the place the AI increase is true now? Tunguz suggests we’re at a plateau, with main adjustments on the way in which, particularly for software program giants. His case is that this: AI is poised to disrupt entrenched workflows that main software program incumbents like Salesforce and Zendesk are constructed upon, rendering them weak. He likens these corporations to “ossified,” bone-like constructions—inflexible and unable to adapt shortly to the speedy adjustments AI will drive in white-collar work.
“Salesforce, Zendesk, Workday, ServiceNow, all those big companies, I think, are finally attackable in a way that they haven’t been in 20 years,” Tunguz instructed Fortune.
Tunguz is consistently calibrating for what change might appear like. One other idea: “I’ve been wondering, In five years, will keyboards still have letters?” He thinks it’s fairly seemingly that, as computer systems more and more hear and reply to voice instructions for duties like navigation and summarizing, handbook typing will fade away.
Enterprise capital is a world crammed with theories, and in some sense, having a idea is a VC’s job. However Tunguz has made me take into consideration why the business wants its theories within the first place: So as to make investments early in any respect, you might want to have a view concerning the future. Tunguz additionally is aware of that he can’t depend on idea alone, and says there’s a essentially balanced relationship between idea and observe. The purpose isn’t perfection, however to be “mostly right” by always testing and refining concepts within the mould of the scientific methodology, he stated.
“It’s easy to pontificate about the future and end up in the wrong place if you aren’t trying the tools, talking to buyers, and testing it with people who criticize your ideas, who point out the flaws,” Tunguz instructed Fortune.
So, what’s distinctive about Tunguz is just not that he has theories, however the public, data-driven forthrightness with which he presents them. It’s a danger, actually. He could possibly be improper, he could possibly be copied. However in Tunguz’s method, there’s considerate transparency—and confidence.
See you Monday,
Allie Garfinkle
Twitter: @agarfinks
Electronic mail: alexandra.garfinkle@fortune.com
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VENTURE DEALS
– Lighthouse, a London-based journey and hospitality insights platform, raised $370 million in Collection C funding from KKR.
– Enveda, a Boulder-based AI-powered drugs developer from pure compounds, raised $130 million in Collection C funding. Kinnevik and FPV led the spherical and had been joined by Baillie Gifford, Premji Make investments, Lingotto Innovation, and others.
– Liquid Wind, a Gothenburg, Sweden-based eFuel manufacturing services developer, raised €44 million ($46 million) in Collection C funding. Uniper, HYCAP, and Samsung Ventures led the spherical and had been joined by current investor Klimatet Make investments.
– OneRail, an Orlando-based omnichannel success answer supplier, raised $42 million in Collection C funding. Aliment Capital led the spherical and was joined by eGateway Capital, Florida Alternative Fund, current buyers Arsenal Progress Fairness, Piva Capital, Bullpen Capital, and others.
– TailorMed, a New York Metropolis-based end-to-end healthcare platform, raised $30 million in funding. Windham Capital Companions led the spherical and was joined by Citi Impression Fund, Samsung Subsequent, BrightEdge, and others.
– Wordware, a San Francisco-based AI improvement full-stack working system, raised $30 million in seed funding. Spark Capital led the spherical and was joined by Felicis, Y-Combinator, Day One Ventures, and angel buyers.
– Aviz Networks, a San Jose-based AI-driven networking options supplier, raised $17 million in Collection A funding. Alter Enterprise Companions led the spherical and was joined by Celestica, Qualcomm Ventures, and current buyers Cisco Investments, Second Ventures, Wistron, and Accton.
– Teleo, a Palo Alto-based heavy gear autonomous know-how developer, raised $16.2 million in Collection A extensions. UP.Companions led the $9.2 million first extension spherical and was joined by Trousdale Ventures, current investor F-Prime Capital, and others. UP.Companions led the second extension spherical and was joined by Triatomic Capital, current buyers F-Prime Capital and Vehicles Enterprise Capital, and others.
– Aizen Therapeutics, a San Diego-based mirror peptides biotech developer, raised $13 million in seed funding. Madrona led the spherical and was joined by Wilson Hill and Cercano.
– Aquaria, a San Francisco-based air water infrastructure developer, raised $12 million in funding from Mistletoe, Ciri Ventures, Soma Capital, and others.
– Anomalo, a Palo Alto-based information high quality platform developer, raised $10 million in a Collection B extension from Smith Level Capital.
– Crown Affair, a New York Metropolis-based haircare model, raised $9 million in Collection B funding. True Magnificence Ventures led the spherical and was joined by current buyers Selva, Sidekick, Stage 1.
– Amigo, a New York Metropolis-based digital cloning platform for service suppliers, raised $6.3 million in funding. Common Catalyst and GSV Ventures led the spherical and had been joined by Comma Capital, CohoVC, and angel buyers.
– Kodiak Hub, a Stockholm-based provider relationship administration platform supplier, raised €6 million ($6.3 million) in funding. Oxx led the spherical and was joined by current investor Scandector.
– Revisto, a San Antonio-based medical, authorized, and regulatory AI assessment answer for pharmaceutical advertising supplies, raised $4 million in seed funding. LiveOak Ventures led the spherical and was joined by Eli Lilly, Tau Ventures, and Arkin Digital Well being.
– DANNCE.AI, a Boston-based AI biomarkers platform for neurological care, raised $2.6 million in pre-seed funding. LDV Capital led the spherical and was joined by Glasswing Ventures, The Leo Lion Firm, Duke Capital Companions, and Merck Digital Sciences Studio.
– SuperScale, a Bratislava, Slovakia-based recreation enterprise analytics supplier, raised $1.2 million in funding from Strecko Investments and current buyers Throughout Personal Investments, LevelUp Ventures, Zero One Hundred, and Enterprise to Future Fund.
PRIVATE EQUITY
– Centerfield, a portfolio firm of Platinum Fairness, acquired Brainjolt, a Pasadena-based social commerce platform. Monetary phrases weren’t disclosed.
– Jones Lake Administration, backed by Fort Level Capital, acquired Ponds Lovely, a Medina, Ohio-based pond and lake administration providers supplier. Monetary phrases weren’t disclosed.
– SolomonEdwards, a portfolio firm of Renovus Capital Companions, acquired Dominion Advisory Group, a Newport Seaside, Calif.-based anti-money laundering advisory and monetary crime consulting agency. Monetary phrases weren’t disclosed.
EXITS
– DwyerOmega acquired Course of Sensing Applied sciences, an Ely, England-based measurement and monitoring options supplier for process-critical purposes, from AEA Buyers and Battery Ventures. Monetary phrases weren’t disclosed.
– Fremman Capital acquired a majority stake in rehaneo, a Munich-based outpatient rehabilitation service supplier, from Gimv. Monetary phrases weren’t disclosed.
OTHER
– Accenture acquired Allitix, an Irvine, Calif.-based Anaplan options supplier. Monetary phrases weren’t disclosed.
– Vercel acquired Grep, a code search engine. Monetary phrases weren’t disclosed.
– Wiz acquired Dazz, a Palo Alto-based unified safety remediation supplier. Monetary phrases weren’t disclosed.
FUNDS + FUNDS OF FUNDS
– Accel-KKR, a Menlo Park, Calif.-based funding agency, raised $2.2 billion for its first fund targeted on secondary investments within the software program business.
– Neos Companions, a San Diego-based funding agency, raised $1.4 billion for its second fund targeted on power transition and important infrastructure .
– Blue Bear Capital, a Jackson, Wyo.-based enterprise capital and progress fairness agency, raised $160 million for its third fund targeted on know-how corporations within the power, infrastructure, and local weather sectors.
PEOPLE
– Anzu Companions, a Washington, D.C.-based enterprise capital and personal fairness agency, added Hunter Brown as a principal. Beforehand, he was at Anduril Industries.
– H/L Ventures, a New York Metropolis-based enterprise capital agency, promoted Galina Ozgur to basic companion.
– Welsh, Carson, Anderson & Stowe, a New York Metropolis-based non-public fairness agency, added Invoice Bowman, Bala Girisaballa, and Lawrence Miller as working companions. Beforehand, Bowman was at Emburse, Girisaballa was at Vista Fairness Companions, and Miller was at Wilshire.
