Tuesday Capital Launches $30 Million Fund IV

Tuesday Capital's Evolution Over a Decade

Tuesday Capital, a seed-stage investment fund established a decade ago by Patrick Gallagher and Michael Arrington – the founder of TechCrunch – has undergone significant transformations throughout its history. Currently, Arrington directs a cryptocurrency hedge fund.

The fund, initially known as CrunchFund, is presently managed by Gallagher alongside partner Prashant Fonseka, who joined the team as an associate in 2015.

Strengthened Partnerships and Portfolio Growth

Over the years, Tuesday Capital has cultivated a strong relationship with Frog Design, a prominent industrial design firm. Frog Design serves as a limited partner in the fund and transferred a portion of its venture portfolio to Tuesday last year, resulting in Tuesday acquiring stakes in nine startups.

A decade ago, Tuesday Capital’s portfolio was considerably smaller. Now, having invested in 600 founders and achieved several successful exits, the firm possesses valuable networks and a proven track record, according to Gallagher. This has enabled them to recently close their fourth fund with $30 million and expand their investment scope globally, potentially seeking further investment later this year.

Navigating a Competitive Landscape

These developments are particularly impactful in a highly competitive market where angel investing and pre-seed fund management have become increasingly prevalent. Currently, over 30% of Tuesday’s investment opportunities originate from referrals.

Furthermore, 15% of their recent investments are in companies founded by entrepreneurs who previously benefited from Tuesday Capital’s backing. Notable portfolio companies include DigitalOcean, a cloud computing provider that went public in March; Airtable, a collaborative software company valued at nearly $6 billion; and Rover, a pet care marketplace preparing for a public offering via a SPAC.

Adapting to New Realities

The pandemic has also unexpectedly reshaped the firm’s approach. While early investments included geographically diverse companies like Kueski, a buy-now-pay-later fintech firm in Mexico, the firm is now discovering even more promising startups outside of Silicon Valley.

This is largely due to Fonseka adopting a nomadic lifestyle since early last year, engaging with founders during his travels. His recent destinations include Tulum, Mexico; Costa Rica; Virginia; Miami; and Austin. Gallagher jokingly remarks that Fonseka’s permanent return is uncertain, as he enjoys this lifestyle.

Leveraging Remote Collaboration

Tuesday Capital is also increasing its remote investments, aided by Frog Design’s global presence and its ability to connect Tuesday with potential clients. Additionally, the firm has become more comfortable utilizing Zoom for due diligence processes.

A recent investment exemplifies this trend: a check was issued to Applied XL, a 16-month-old startup based in Brooklyn, New York. Applied XL is developing real-time information systems powered by experts to monitor the health of people, places, and the planet, securing $1.5 million in seed funding led by Tuesday, with participation from Frog Design.

Maintaining a Consistent Investment Strategy

Despite market fluctuations, the firm’s core investment philosophy remains unchanged. While many funds grow in size and lead larger deals over time, Tuesday Capital prefers to maintain its focus on initial investments ranging from $250,000 to $550,000, often participating as a syndicate partner.

Tuesday Capital distinguishes itself as a generalist fund, maintaining a broad investment scope. Gallagher emphasizes their openness to diverse opportunities, stating, “We’re open to B2B deals and vertical SaaS opportunities.”

Focus on Founders and Global Reach

Ultimately, the firm prioritizes mission-driven founders, regardless of whether they operate in the consumer or enterprise space, or their geographical location, including companies as far afield as Israel.

With the addition of associate David Jee, Tuesday Capital has now invested in a total of 29 startups with its newest fund, including the nine acquired through Frog Design.