Tuesday Capital, a 10-year-old seed-stage fund that was founded by longtime VC Patrick Gallagher and TechCrunch founder Michael Arrington, has changed considerably over the years. Arrington now leads a crypto hedge fund. Tuesday was formerly known as CrunchFund. Gallagher now runs the outfit with partner Prashant Fonseka, who joined the fund in 2015 as an associate.
Tuesday has also formed a tight relationship over the years with the industrial design shop Frog Design, which is a limited partner in the fund and sold a portion of its venture portfolio to Tuesday early last year. (Tuesday obtained stakes in nine startups in the deal.)
Perhaps most meaningfully, 10 years ago, Tuesday didn’t have stakes in so many portfolio companies. Now that it has backed 600 founders, it has exits to point to and networks to leverage, says Gallagher of why the firm, which recently closed its fourth fund with $30 million, is now investing all over the globe and could be in the market later this year.
Both make a huge difference in a frothy market, where everyone and their brother has become an angel investor — if not a pre-seed fund manager. Indeed, upward of 30% of Tuesday’s deal flow now comes from referrals and 15% of its newest stakes are in portfolio companies whose founders have spun out of companies that Tuesday backed previously. Among those many portfolio companies is the cloud computing company DigitalOcean, which went public in March; the collaborative software maker Airtable, recently valued by its investors at nearly $6 billion; and the pet care marketplace Rover, set to become publicly traded via a SPAC.
As it happens, the pandemic itself has also changed the firm is unanticipated ways. Though the firm’s early bets included some that are far flung, such as the buy-now-pay-later fintech Kueski in Mexico, it is now seeing even more interesting startups outside the Bay Area because Fonseka has been “living like a nomad” since early last year — and talking with founders en route. (Recent stops include Tulum, Mexico; Costa Rica; Virginia; Miami; and Austin. “We’re not sure he’ll land,” laughs Gallagher. “He does enjoy this lifestyle.”)
Tuesday is also ratcheting up its remote bets thanks in part to Frog, which has offices around the globe and often introduces Tuesday to clients, and to Zoom, which the firm has gotten more comfortable about using to diligence a deal.
One recent check, for example, went to Applied XL, a 16-month-old, Brooklyn, N.Y.-based startup that’s developing real-time information systems powered by experts to track the health of people, places and the planet, and which raised $1.5 million in seed funding led by Tuesday, with participation from Frog (which continues to fund the occasional startup off its balance sheet).
What hasn’t changed is the firm’s thinking about its place in the investing universe. While in go-go markets like this one, funds tend to get bigger, write larger checks, and lead deals as time passes, Tuesday is content to write initial checks of $250,000 to $550,000 and to be a syndicate partner.
While everyone has an angle these days, Tuesday has always been, and continues to be, a generalist fund.
“Our mandate is very broad,” says Gallagher. “Prashant is spending time around digital health. I’ve [long liked] e-commerce and space. But when someone asks, ‘Should we show you a B2B deal? Should we show you vertical SaaS?’ I’m like, ‘Yes.’
“Ultimately,” he says, “we love mission-driven founders, whether consumer or enterprise,” and whether in California or as far away as Israel.
Tuesday, which also includes associate David Jee, has now backed 29 startups altogether with its newest fund, including the nine it acquired through Frog.