Thirty years of betting on day zero

I reflect on Foundation’s three decades of conviction-based investing, and why our Fund 11 marks our deepest commitment yet to early-stage founders.

This Tuesday, we announced our Fund 11: $600M dedicated to backing founders at day zero. It’s both a milestone and a moment for reflection – not just on Foundation Capital’s own journey, but on how venture capital itself has evolved over the last three decades.

Over the past 30 years, we’ve lived through the Valley’s most important inflection points, from the dot-com era in 1995 to the rise of AI since 2010, and more recently, the advent of crypto. Through each wave of change, one thing has remained constant: our commitment to stand alongside engineers and technologists with a unique insight into the shape the future will take. These are people who think differently, who are dissatisfied with the status quo, and who have a hunger to create something consequential. 

For three decades, we’ve supported builders with the vision and determination to reshape industries, even when – especially when – others don’t yet see what they see. Foundation exists to find these individuals who possess – or are possessed by – this rare combination of vision, grit, and defiance, and to journey with them – from founder to CEO, idea to IPO.

The changing nature of venture

When Foundation Capital began, the venture industry was an order of magnitude smaller. In 1995, all U.S. VC firms combined invested roughly $8B. In 2024, that number exceeded $200B. What once took more than two decades to deploy now happens in a single year. The scale of venture – and the economic impact of the startups it enables – has expanded dramatically. The largest venture firms today manage over 100x the assets they did three decades ago, reflecting technology’s ascent as the dominant economic force of our time.

Startups, in turn, have adapted. In 1997, our portfolio company Netflix raised around $2M in its Series A at a roughly $10M post-money valuation. It went public in 2002 with just $82.5M raised at a roughly $300M valuation. Today, those numbers feel like rounding errors. AI startups with little revenue now raise hundreds of millions at multi-billion-dollar valuations. Startups routinely stay private until they are worth multiple billions, reaching valuations that once belonged exclusively to public markets.

These shifts have blurred the line between late-stage venture and public market investing. IPOs, once a rite of passage for great startups, are increasingly delayed, often indefinitely. Google went public at a $23B valuation in 2004, six years after its founding. By contrast, Databricks recently raised its Series J at a $62B valuation, 12 years into its journey. Stripe is 15 years in and still pursuing private capital at a $91.5B valuation.

For the buzziest AI startups, the numbers are even more dramatic. Anthropic is raising at a $60B valuation, and OpenAI is in talks to raise $40B at $300B valuation, doubling its valuation in less than six months. To put these numbers in further context, the median market cap of a company in the S&P 500 is around $30B. If any of these companies were to IPO tomorrow, they would instantly be among the largest companies in the world.

On the one hand, the tremendous growth of venture capital reflects its success – venture-backed companies today account for roughly 70% of the combined $75T market cap of the S&P and NASDAQ. But scale has also brought change. Venture has splintered into multiple different kinds of firms, many of which have moved away from the industry’s origins as a craft-based business. As capital has flooded in, the incentives for partners have evolved, sometimes resulting in misalignment with both entrepreneurs and LPs.

This raises a deeper question: At this scale, can venture still generate returns that justify its illiquidity premium, or are we simply tracking the S&P with more friction?

What makes day zero investing different

In an industry where many firms are evolving into asset managers – seeking to be the Blackstones of venture – we believe the work of investing at day zero demands a different model. Large, multi-stage firms simply aren’t designed for this. It’s not just about capital; it’s about deep, hands-on partnership. Early-stage company-building requires more senior involvement, not less – something that most multi-stage firms are structurally unable to provide.

To be an exceptional early-stage investor, you can’t just write checks. You have to build.

For us, early doesn’t just mean early-stage. It means being there at day zero, side by side with founders as they take on their hardest challenges. We help technical founders refine their positioning and share their story with the world. We know that landing the first 10 customers is a matter of life or death, so we leverage our network of Fortune 500 leaders to open doors. We help recruit and close key early hires, from engineers to GTM leaders, and build out the company’s initial team. And we design, and often co-pilot, the fundraising process for the next round.

Recently, we asked our founders to reflect on what this early conviction looks like in practice.

Trey Holterman, co-founder of Tennr, put it this way: “Foundation really took a bet on us before we knew how to sell and how to describe the value to our customers. It was just three of us.” At a stage where many investors hesitated, Foundation stepped in – not because of a polished pitch deck, but because we saw the determination and technical brilliance behind Trey’s vision and founding team. “Now I look back and have this just sort of insane gratitude for the bet that Foundation made on us. I think they knew that we deeply cared about solving a problem, […] that we were technologists that were going to make sure we built an incredible solution that created a lot of value.”

Around 80% of our investments happen before a startup earns its first dollar. At this stage, founders don’t just need capital – they need an ally to navigate the choices that will most define the trajectory of their company. As Trey put it, building his company in the 0 to 1 stage with Foundation in his corner felt like “swimming with sharks and having an orca on my side.”

Jonathan Siddharth, CEO of Turing, described what it’s like to work with Foundation from the very beginning: “When people ask me how long I’ve been working with Ashu and Foundation Capital, I often say it’s from day minus 100 of the company starting. Ashu was ready to back the company at a time when the company could have been one of two different ideas. It was truly a bet on the founders.”

That bet – on the people, not just the idea – has carried through every stage of Turing’s growth. “It’s not always been smooth sailing,” Jonathan admitted. “There have been choppy waters, there have been ups and downs. And Ashu and the Foundation Capital team were steadfast in their support. They were very calm when the hype cycle was on and everybody was going crazy, and they were equally calm when the markets corrected.” He summed up: “I’m excited about the opportunity we have to build a $100B plus company over the next decade. To do that, you kind of need partners with that long-term mindset. And Foundation has been that.”

Just yesterday, Turing announced that it had raised $111M at a $2.2B valuation – a huge testament to Jonathan and his team. It’s been a privilege to be there since “day minus 100.”

For some founders, our conviction has meant more than just financial support – it’s been deeply personal. Srinath Sridhar, co-founder of Regie, put it best: “If I were to start a company again, would Foundation be the first check? And I think the answer’s a resounding yes. Professionally, we have had ups and downs as any startup would. And personally as well, I’ve had huge ups and downs. To have a partner who would work with us so closely and help us through that journey is remarkable”

This is what day zero investing means to us. It’s not about betting on an industry trend – it’s about betting on the people who will create the future, before anyone else will.

Conviction, not consensus

Early-stage investing isn’t about following the crowd. It’s about seeing the future before others do – and having the conviction to act on it when conventional wisdom says otherwise.

In 2006, I was leading a display ads team at Microsoft when an engineer suggested using machine learning to optimize ad targeting. The results were striking, and I became convinced that ML would transform software, at a time when most in the industry saw it as an academic curiosity. When I joined Foundation, I brought that conviction with me – long before AI became a mainstream investment thesis.

In 2008, when streaming video was widely dismissed as a niche for “cat videos,” I joined the Conviva board, where I met Ion Stoica. Ion and his student at Berkeley, Matei, developed Spark as a way to solve real-world problems at Conviva. And so, when they decided to create Databricks to commercialize Spark, I had already built the conviction to invest. Years later, I backed Ion again at Anyscale – another  open-source project, born in an academic lab at Berkeley, that has since become a leading AI infrastructure platform.

These experiences taught me three crucial lessons about day zero investing. First, being deeply involved with an early-stage company allows you to recognize transformative technologies before their impact becomes obvious. Second, the best investments aren’t just in ideas but in the exceptional people who build them – finding and following these individuals pays outsize dividends over time. And third, seeing the future before it happens requires both deep technical understanding and deep conviction.

Of course, not every bet pays off. The ML challenges we encountered at TubeMogul led to our investment in Arize years later – which has been a breakout success. Yet these same challenges also motivated investments in cloud infrastructure companies like Zerostack and Opus, both of which ultimately failed. Yet, in venture, the biggest mistakes aren’t the investments that don’t work out – they’re the ones you never make. In this industry, errors of omission are far costlier than errors of commission.

Conviction requires the courage to look wrong before you’re proven right. We placed our first AI bet in 2009 – more than a decade before ChatGPT made AI a mainstream conversation. We’ve been investing in blockchain since 2014, staying committed through market cycles while others retreated.

Today, AI and blockchain remain the two mega-trends we are most focused on. Both are still early in their evolution, yet their impact on our economy is already undeniable. AI is making intelligence programmable. Crypto is making value programmable. Together, they represent a fundamental replatforming of our digital and economic worlds.

AI is no longer just augmenting human productivity – it’s becoming the worker itself. Our thesis is that software is evolving from “Software as a Service” to “Service as Software,” where AI doesn’t just assist with work but performs it autonomously. AI-native applications will draw on systems of agents that collaborate with each other and with humans to make decisions and execute end-to-end tasks. This paradigm shift in how software is built and delivers value will push software beyond traditional IT budgets into the vastly larger global services economy, unlocking a $4.6T opportunity and adding trillions more to global GDP by 2030.

The craft of company building

As we reflect on 30 years of investing, our core belief remains unchanged: Invest in the right people, and the future will follow. Venture is a long game. In an era of more capital, bigger rounds, and ever-larger firms, we remain steadfast in our belief that day zero investing is a craft – one that requires focus, patience, and conviction.

It’s a Silicon Valley cliché, but time and again, it proves true: the next legendary company often starts with two engineers in a garage and a seed of conviction. That same conviction – in our founders, their vision, and their ability to bring it to life – is what we offer from day zero. 

With our Fund 11 as fuel, we’re more excited than ever to partner with the next generation of founders and help them create what’s next.