Seattle pre-seed venture capital firm Essence VC says it has raised $27 million for its third fund to back early-stage startups building software development tools, data infrastructure and artificial intelligence.
The firm is led by managing partner Timothy Chen, a veteran entrepreneur and advisor at San Francisco-based Bessemer Venture Partners.
Essence has made seven investments since December through its third fund, participating in several high-profile funding rounds, as first reported by Insider. It invested in marketing content generator Jasper AI, serverless data analytics platform MotherDuck, computer vision startup Groundlight, and others.
The firm targets early-stage startups developing technical infrastructure, which describes tools like software development kits or databases that help engineers build products. Essence often finds companies in their earliest stages, even before they have released a product, Chen told GeekWire.
“There’s not many funds out there that know how to help you to go from zero — pre-product with a napkin idea — to somebody that can actually sell,” he said. “Sometimes that goes really smoothly, but a lot of times it doesn’t. And so I’m here to help you through that process.”
Chen draws on his experience as an entrepreneur to guide founders. He helps them navigate, both operationally and emotionally, the various challenges that come with developing infrastructure companies. Hurdles include technical complexities, extensive capital requirements, and lengthy product development timeframes.
A University of Washington graduate, Chen co-founded machine learning technical infrastructure company Hyperpilot alongside Stanford professor Christos Kozyrakis and co-founder Michael Huang. The business was sold in 2018 to enterprise data and analytics giant Cloudera. He also held software engineering roles at Microsoft, VMWare, and several early-stage startups.
Essence’s latest fund comes as a growing number of venture firms allocate capital and other resources to support infrastructure-based startups, Chen said. There are not many pre-seed VCs in the space, but there are firms such as Data Community Fund, Abstraction, Heavybit, and Amplify AI that have comparable investing models, he added.
Chen said Essence typically leads the pre-seed rounds it participates in, with checks ranging from $250,000 to $700,000. He said the fund is geographically flexible, investing in startups in a variety of locations.
Essence’s previous fund was $7 million, while its initial fund was $1 million. A challenge with the new fund will be adapting processes to match the increased capital pool, Chen said, including writing larger checks to startups and increasing deployment pace.
Large tech companies like Microsoft, Amazon and Google have been investing heavily in rolling out infrastructure tools for developers and generative AI products. Chen said startups can still compete by focusing on specific use cases. He pointed to Jasper AI, which he said developed a first-mover advantage by compounding data from its users to help it refine its AI model’s outputs for marketing content.
The latest fund took about five months to close, Chen said. The anchor investor was Cendana Capital, which led the previous round. Other limited partners include Vintage Investment Partners, Sapphire Partners, Level Ventures, Crossover, as well as several angel investors.
Founders who previously received venture funding from Essence also participated in the round, Chen said.
“They wrote larger checks to me than I have to them,” he said.
