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The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Who Wins in AI; Startup vs Incumbent, Infrastructure vs Application Layer, Bundled vs Unbundled Providers | From 150 LP Meetings to Closing $230M for Fund I; The Fundraising Process, What Worked, What Didn't and Lessons Learned with Tomasz Tunguz

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4637 Ratings

🗓️ 21 April 2023

⏱️ 53 minutes

🧾️ Download transcript

Summary

Tomasz Tunguz is the Founder and General Partner @ Theory Ventures, just announced last week, Theory is a $230M fund that invests $1-25m in early-stage companies that leverage technology discontinuities into go-to-market advantages. Prior to founding Theory, Tom spent 14 years at Redpoint as a General Partner where he made investments in the likes of Looker, Expensify, Monte Carlo, Dune Analytics, and Kustomer to name a few. Tom also writes one of the best blogs and newsletters in the business which can be found here.

In Today's Episode with Tomasz Tunguz We Discuss:

  1. Founding a Firm: The Start of Theory:

  • Why did Tom decide to leave Redpoint after 14 years to found Theory?
  • What are 1-2 of his biggest lessons from Redpoint that he has taken with him to his building of Theory?
  • What does Tom know now that he wishes he had known when he started investing?

2. From 150 LP Meetings to Closing $230M: Raising a Fund I

  • How would Tom describe the fundraising process?
  • How many meetings with LPs did he have? How many did he know previously?
  • What documents did he share with LPs? Did he have a dataroom? How did he use it?
  • How did Tom create a sense of urgency to compel LPs to come into the fund?
  • How does Tom feel about the debate between one close and multiple closes?
  • What was the #1 reason LPs said no to investing?
  • What worked and Tom would do again for the next raise? What did not work and he would change for the next raise?

3. Where Will Value Accrue in the Next Decade of AI:

  • Startup vs Incumbent: Will incumbents embrace AI before startups are able to acquire distribution?
  • Infrastructure vs Application Layer: Where will the majority of value accrue in the next decade; infrastructure or application layer?
  • Bundled or Unbundled: Will bundled services be the dominant consumer and enterprise choice or will unbundled specialized solutions win?

4. AI and The World Around It:

  • How does Tom believe AI could save the US economy?
  • Why does Tom believe Google are the losers in the AI race?
  • Which incumbents have responded best to AI?
  • Why does Tom believe we will be in a worse macro place at the end of the year than we are now?

Transcript

Click on a timestamp to play from that location

0:00.0

I think at the foundational model layer, that's a big boy's game or big girls game.

0:03.8

The odds of success are going to be significantly higher at the application layer because the diversity of needs there is greater.

0:08.7

We're faced with the technology that could actually replicate the post-war surplus out of World War II.

0:14.5

I think Google had a rude awakening where, to some extent, they developed in-house but ignored.

0:19.4

So it's a classic innovator's dilemma.

0:21.6

This is 20 VC with me, Harry Stebbings. Now, the last time I had Tom Tungers on the show was

0:25.8

seven years ago since he's become a dear friend and last week he announced his new $230 million

0:31.2

fund, Theory Ventures. No one deserves this more than Tom and it made me so, so happy to see. Prior to

0:36.8

founding theory,

0:37.7

Tom spent 14 years at Red Point as a general partner where he made investments in the

0:41.6

lights of Looker, Expensify, Monte Carlo, June Analytics and customer, to name a few. But before we

0:47.3

dive into the show today, you've heard me talk about Coda. Coda is the doc that brings it all

0:51.6

together and how it can help your team run smoother and be more efficient.

0:55.0

I know this because Coda helps me.

0:57.0

At 20VC, we use Coda for all of our research for every episode, so all team members essentially can work on the schedule all in one dog,

1:05.0

seamlessly built by Coda.

1:07.0

And here's how Coda can help your team run smoother and be more efficient.

1:10.0

Coda allows your team to operate on the same information and collaborate like my team does all in one Coda place.

1:16.6

By putting data in one centralized location, regardless of format, it eliminates so many roadblocks that can just stop your team in their tracks.

1:23.6

This is really what slows down productivity and collaboration.

1:26.6

With Coda, your team can

1:28.1

operate on the same information and collaborate in one place to get projects across the finish line

...

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