Tola Capital, a venture capital firm investing in AI-enabled enterprise software, has secured $230 million for its third fund, marking its largest fund to date.
Recent weeks have seen several new VC funds, with Tola Capital joining the likes of NXTP, Saviu Ventures, Kinterra Capital, Riverwood Capital, Twelve Below, SEVA, Ballistic Ventures, Founders Fund, and Avra in raising substantial capital.
Despite a challenging fundraising environment in the past year, Tola Capital’s co-founder and managing director, Sheila Gulati, expressed that the growing interest in artificial intelligence made it an opportune time to raise a new fund, given the potential for transformative impact.
Founded in 2010 by experienced enterprise software operators, including Gulati who led Microsoft’s enterprise IT strategy, Tola Capital focuses on AI as a significant and game-changing opportunity.
Gulati emphasized the tremendous potential of AI, expressing excitement about the paradigm shift and the unparalleled opportunities for early-stage AI investments.
Focus on AI
Recent developments at OpenAI have sparked discussions within the AI community, as several of Tola Capital’s portfolio companies rely on GPT technology. Consequently, the firm worked proactively with these companies on contingency plans. Gulati also weighed in on OpenAI’s governance model, highlighting room for improvement in decision-making processes to foster innovation.
Tola Capital’s latest fund brings its total raised funds to $688 million. The firm targets seed and early-stage startups in enterprise software leveraging AI, contributing to IDC’s forecast of the global AI software market reaching nearly $792 billion in revenue by 2025.
The firm’s investment focus lies in the “enterprise scaffolding” of AI, which encompasses responsible AI, AI security, and app layer AI, rather than foundational AI technologies.
Criteria for Startup Investment
Building on its successful track record, Tola Capital’s previous funds have resulted in over a dozen successful exits. With Tola Capital III, the firm plans to invest in 25 to 30 companies globally, with average check sizes ranging from $1 million to $15 million for seed-stage and Series A/B companies. It has already invested in eight companies, including Arcus, ESG Flo, FeatureByte, Fetcher, Holistic AI, Langsafe, Lumeus, and Zilla.
Tola Capital is on the lookout for startups with a strong founding team, innovative products, a large addressable market, and a culture conducive to building successful businesses that attract top talent.
Gulati emphasized the firm’s commitment to backing companies with ambitious visions and a drive to build transformational multibillion-dollar enterprises.