Raising Our Third Fund When the Rules Keep Changing

Today we’re announcing our third fund: $265 million for Team8 Capital III, alongside more than $100 million earmarked for follow-on investments in our highest-conviction portfolio companies. This brings Team8 to nearly $2 billion in assets under management across eight funds since 2014.

Every time we raise a new fund, I try to step back and ask myself the same question:

What have we actually learned since the last one?

Our first fund was $160 million across 12 investments. Our second was $235 million. Along the way, we saw Talon and Dig Security acquired, followed by Koi Security’s acquisition by Palo Alto Networks this February, an exit from Fund III before the fund had even reached final close.

Of course, those outcomes matter.

But when I think about what gives me confidence going into our third fund, different things come to mind:

• Were we able to identify important opportunities early because of what we know?
• Were we genuinely useful to founders rather than simply present?
• Did we help shorten a sales cycle, challenge an assumption, kill a bad idea early, find the right executive, or open a door that materially changed a company’s trajectory?

That is the part that compounds.

And since we raised our last fund, the environment in which we answer those questions has changed dramatically.

AI has rewritten the economics of company building.

For most of my career, one of the scarcest resources in technology was technology itself. Building world-class software required years of engineering, significant capital and exceptional technical talent. If you built something technically difficult, you had a meaningful head start.

Today, a remarkably small team with access to frontier models can build in weeks what once took years.

That is one of the most exciting changes I have seen in technology in three decades.

But it also changes what creates lasting competitive advantage.

If your advantage lives primarily in the model underneath your product, you probably don’t have much of an advantage. Your competitor can access the same model. And six months from now, both of you may be using an even better one.

So if intelligence is becoming abundant, what becomes scarce?

Judgment.

And by judgment, I don’t mean intuition.

I mean knowing which problem is actually worth solving.

Knowing the difference between an impressive demo and a product that an enterprise will trust enough to deploy at scale.

Knowing which customer pain is interesting and which is important enough that someone will change behavior and allocate budget to solve it.

Knowing when a technological breakthrough creates a lasting market opportunity, and when it is simply another capability everyone will soon have.

And perhaps most importantly, knowing what not to build.

Ironically, as AI gets dramatically better at generating answers, choosing the right questions becomes even more valuable.

The same shift is happening in venture investing.

Capital isn’t scarce today. There is an enormous amount of capital chasing AI companies.

Access to AI isn’t scarce either.

What remains scarce is context.

Understanding how enterprises actually operate.

Knowing which problems are real, which are budgeted, and which are about to become urgent.

Recognizing which workflows are going to change fundamentally, and which ones won’t.

And understanding where AI creates genuine business value rather than simply excitement.

Those insights don’t come from model benchmarks alone. They come from the combination of deep domain expertise, constant dialogue with enterprise leaders, and working alongside founders as new technologies move from possibility to real-world adoption.

That has a very practical implication for how we think about Fund III.

AI is no longer an investment category, it is becoming part of the architecture of almost every company we see. So the question for us isn’t whether a company is “AI” enough, or which foundation model will win. It is where AI creates a fundamental shift in what is possible, and where that shift opens the door to a truly enduring company.

What matters to us is where durable value will be created.

If the moat is simply access to a model, it won’t last.

The companies that define the next decade will own something much harder to replace: a critical workflow, customer trust, proprietary context, deep integration into enterprise operations, or infrastructure that organizations simply cannot operate without.

That is why we continue to invest at the Seed and Series A stages across cybersecurity, software infrastructure, fintech and digital health, with particular conviction around the foundational layers that enterprises will rely on more heavily as AI adoption accelerates: infrastructure, orchestration, identity, data and security.

These may not always be the flashiest parts of the AI stack.

But they are the parts that become more important, not less, every time the technology advances.

And this is also why I don’t believe foundation model companies will simply absorb all the value created above them.

They will certainly absorb some of it.

But every major technology platform has created enormous new companies on top of it.

Cloud computing created AWS, but it also enabled Snowflake, Datadog and CrowdStrike.

Smartphones created enormously powerful platforms for Apple and Google, but they also enabled Uber, Airbnb and many others.

Foundation models will be no different.

The winners won’t simply be the companies with access to the best AI.

They will be the companies with the best judgment about where AI creates lasting value, and the ability to turn that judgment into products customers cannot easily replace.

That brings me back to our own role.

Seven years ago, when we began investing in companies we had not built ourselves, there was a question we genuinely needed to answer: could Team8’s company-building capabilities become a real advantage for independent founders too?

Today, I feel much more confident about the answer.

If judgment and context matter more in this environment, then writing a check is only a small part of the job.

We have spent years building the infrastructure around our founders, our company builders, our network of enterprise leaders, our domain experts, and our AI Excellence Center. Not to make decisions for founders, but to help them ask better questions, test assumptions earlier, see around corners, and recognize changes in the market before they become obvious.

Sometimes that means helping validate a market.

Sometimes it means realizing early that an idea is wrong.

Sometimes it is finding the right customer, the right executive or the right partner at exactly the right moment.

In a world moving this quickly, I think that kind of context matters more than ever.

Sometimes the greatest value you can give a founder isn’t an answer. It’s the context that helps them make a better decision.

So, looking back, the biggest lesson I take into our third fund isn’t really about fundraising.

It is that while the rules of company building are changing at extraordinary speed, some of the things that determine whether a company becomes truly great haven’t changed nearly as much.

Exceptional founders.

Exceptional judgment.

Deep understanding of the customer.

And solving problems that will still matter long after today’s models have been replaced.

We are incredibly grateful to the founders who choose to build with us, and to the investors and partners who continue to back us fund after fund.

And I couldn’t be more excited to see what we build together next.