Tim Chen, a solo venture capitalist at his firm Essence VC, recently closed his fourth fund with a fresh $41 million. He accomplished this without a traditional fundraising effort. Limited partner investors were so eager to invest that they preempted the fund, meaning Chen did not even have time to create a pitch deck.
While a $41 million raise may seem modest compared to multibillion-dollar venture firms or other solo VCs, this was by design. Chen did not want to take on more capital. The new fund represents an increase from his third fund of $27 million raised in 2022, which itself was up from his $5 million second fund and his $1 million first fund.
Chen had not begun new fundraising because he was still actively investing from his third fund until last month. However, limited partners began talking about him after one of his portfolio companies from his second fund, Tabular, was acquired by Databricks for approximately $2.2 billion in 2024. That successful exit essentially returned the entire value of his second fund and significantly raised his profile. Suddenly, his name was appearing on cap tables, being mentioned by other investors, and quoted by founders.
Chen specializes in developer-tool and infrastructure startups at their earliest stages, a segment that has grown in popularity with the rise of AI. His credibility stems from his own background as a software engineer. He was one of the earliest employees at Mesosphere, a once-prominent open source cloud infrastructure startup. He later co-founded an AIops startup called Hyperpilot, which was acquired by Cloudera in 2018.
He began angel investing in 2019 and found he had a talent for it, backing technical startups like Jasper, Flatfile, and MotherDuck. He enjoyed the work and found that founders appreciated his contributions, leading to positive word-of-mouth.
When he decided to pursue venture capital full time, he interviewed with several large Sand Hill Road firms but was rejected by all of them. A friend, Jake Zeller, encouraged him not to give up and convinced him to launch his own fund on the AngelList platform. With a pitch deck template and introductions, Chen secured his first limited partners, including Bain Capital.
His success attracted notable investors in subsequent funds. Martin Casado of Andreessen Horowitz became a limited partner, and longtime fund investor Michael Kim of Cendana Capital invested as well. After the Tabular acquisition, Kim informed Chen that Cendana had already reserved $15 million for his fourth fund. Chen was surprised, as he was not actively fundraising and was simply focused on deploying capital.
When another firm, StepStone, pushed him to formalize the process so they could wire money, Chen decided to move forward immediately. AngelList assisted with the fundraising documents. He settled on a cautious increase in fund size, as he still considers himself relatively new to venture capital. The final list of backers for Fund IV includes well-known investors like Tomasz Tunguz and Ethan Kurzweil.
Chen credits his growing reputation to his unique background as an infrastructure engineer. He notes that very few venture capitalists share his deep technical expertise. While this profile was not appealing to large traditional firms, it has become a significant advantage for his solo practice. Instead of focusing on traction and sales, Chen helps early-stage founders with the fundamental challenge of how to build their products.
For example, he invested in a company called ComfyUI when it was working on a consumer visual AI product. After investing, Chen advised the founders to pivot to becoming a developer platform for the models they were fine-tuning. The company recently raised a $17 million Series A round to compete with large closed-source model makers, and their public blog post thanks Chen for helping them craft their strategy.