News & Updates

Investing in the Next Generation of AI Companies with Tola Capital Fund III

Sheila Gulati, Managing Director

In 2010, Stacey and I founded Tola Capital with a whiteboard and no money. No one told us you needed money to start a venture firm! The opportunity we saw for cloud computing to transform the enterprise was once-in-a-generation. Even though Amazon Web Services existed, that was the year our team made Windows Azure commercially available and cloud computing really started to take off.  Given our history and roles in the advent of cloud computing at Microsoft, we had deep conviction that this new technology would change the way the world works.  Since inception, we have always stood for the same things at Tola: partnering with great entrepreneurs to join them on their journey with both our capital and our expertise in building enduring software companies.

And in what seems like a blink of an eye, we fast forward to today. Cloud computing is ubiquitous, open source is universal, and Tola has invested over $400M in 51 start-ups, and our portfolio companies have generated billions in revenues, not to mention billions in enterprise value as well.

It has been deeply rewarding to be involved in the shift to cloud over the years – being on the inside of these momentous changes has been a wild ride in so many ways – but the movement toward Artificial Intelligence feels like it will be even more profound. We know that AI will not only bring transformational changes to the way we work, but we expect these changes to happen much more quickly, and we expect AI to impact our lives even more dramatically.

So while we look back, we also look forward as we celebrate the closing of our third fund – not-so-creatively called Tola Capital III, LP.

Tola now is 13 people strong, and we’ll be investing this new fund’s $230 million into Seed and early-stage start-ups, focusing on AI technologies. We’ve been at the forefront of investing in companies that are leveraging AI, including Pulumi, Klarity, Simpplr, and Nooks, and we’ll be using this new capital to invest in companies specializing in multiple areas of AI, including enterprise scaffolding for AI, responsible AI, AI security, app layer AI and others.

It’s exciting to be partnering with founders who are leading the charge toward change, ushering us into this new age of AI, and we are looking forward to seeing how these real-world changes come into focus.

We’ve deployed capital from fund three into nine companies already – Arcus, BlueBean, ESG Flo, FeatureByte, Fetcher, Holistic AI, Langsafe, Lumeus, and Zilla – and we’re aiming to make additional investments in twenty-five to thirty companies globally, with average check sizes from $1M to $4M for Seed stage companies, and $5M to $15M for Series A and B.

Additionally, we’re celebrating our successful founders turned investors in Tola, including Alexander Dreiling, the founder and CEO of Tola portfolio company Clipchamp, which was acquired by Microsoft in 2021, and is now Microsoft’s core video product. Like many founders in the Tola portfolio who have experienced liquidity events, Alexander joins other founders in becoming an investor in Tola.

As the world changes around us, we are also reminded of the real and meaningful relationships we’ve forged and nurtured, and as we move forward, we are thrilled to have you all along with us. We thank our expert network who work alongside us and our companies, our LPs who back us, and our founders and their teams for sharing their journeys with us!