Tuesday Capital raises $31M for its newest seed-stage investment
Tuesday Capital raises $31 million for its latest seed-stage investment. Michael Arrington, the creator of TechCrunch, and Patrick Gallagher, an experienced venture capitalist, co-founded Tuesday Capital, a seed-stage company with a 12-year history. The firm has since expanded its reach in the past few years. Part of the shift might be attributed to the pandemic when many venture firms met with remote founders online. James Prashant Fonseka is responsible for some of it. He joined Tuesday Capital in 2015 as an associate, was elevated to partner in 2020, and lived as a “nomad” for most of the period. It allowed him to engage in person with entrepreneurs Tuesday Capital may have missed otherwise.
Shift in Headquarters:
Tuesday’s team finally decided to relocate the business from San Francisco to Austin. According to Gallagher, it has “definitely been easier to get to New York and other East Coast cities,” Gallagher feels “great about the decision” to sell the firm’s assets in the Bay Area.
“We have a strong community of founders from our portfolio companies that are now based in Austin,” he says, referring to some who moved during the pandemic and three other teams that Tuesday Capital has backed since it relocated. Austin also “expanded our reach and increased our access to really great deal flow,” Gallagher insists.
Fifth-Funding Round Closure:
The move went so well that Gallagher says the company has just closed its fifth seed-stage fund. The firm received $31 million in capital commitments from many family offices and institutions that have backed Tuesday Capital for years. Gallagher hints that it wasn’t easy. Large institutional investors have no interest in the business since it is too tiny. SPACs are not in favor. It closes one door to a public offering for several of Tuesday Capital’s portfolio firms. (Among its portfolio firms that merged with blank-check corporations are Rover, Opendoor, Satellogic, Inspirato, and Getaround.) Meanwhile, the economic environment has altered significantly since Tuesday Capital created a comparable-size fund ($30 million) nearly precisely two years ago.
“I definitely think that it is harder than ever to raise a fund in general, regardless of size,” Gallagher says.
Reliable Platform for Investment:
Though Tuesday Capital does not yet have the type of cash-on-cash returns that some firms boast about (“It takes a long time for our funds to start generating meaningful liquidity,” he adds), it has demonstrated its ability to enter buzzy deals.
In addition to funding Uber, Digital Ocean, Gitlab, Opendoor, and Airbnb, its still-private portfolio includes some highly valued companies such as Zipline (valued at $4.2 billion in April), Solugen ($2 billion as of last October) and Human Interest ($1 billion a year ago)
Although the business intends to continue paying first cheques of $250,000 to $500,000, Gallagher says it is “definitely getting more ownership today compared to 18 months ago,” though it is “still less” than when the firm began in 2011.
