Touring Capital: An AI focused investment strategy

Oakley partnered with Touring Capital in 2023 to invest in and grow a new generation of global, enterprise software companies. Touring brings together a diverse and highly technical team who have previously worked together to build a number of global venture investing franchises, including Qualcomm Ventures and M12, Microsoft’s venture fund.   

We caught up with Touring Capital co-founder Samir Kumar at Oakley Capital's recent AI Forum to hear about Touring’s investment strategy, how this allows them to identify attractive opportunities, and how their investment can accelerate a company’s AI capabilities and growth trajectory. Watch the video to learn more.

What is Touring’s investment strategy and how does this integrate AI?

Touring focuses on Series B software companies. You can think about Series B as the early growth phase of venture-backed startups. Our entry point is companies that have achieved between three and ten million dollars in annualised recurring revenue.

We are investing globally. The vast majority of our investments will be in North America and Europe. But we have good experience investing in software hubs around the world.

In this current wave of AI, we are looking at the next generation of SaaS companies that are infused with AI, enabling them to achieve a new level of productivity in terms of force multiplying what humans can do. I strongly believe in this model of AI and humans collaborating to be able to achieve a higher amount of productivity.

What do you look for when partnering with a founder?

We really care about founders that understand really well the industry that they are in, have internalised it, ideally have domain knowledge and industry experience. They certainly have to demonstrate competency in the machine learning side, but we don't want to invest in AI startups just for the sake of it.

How does your investment strategy compare to your peers?

We are very cognizant of the fact that we're a new fund and we're going to be competing with some very established brands in the VC industry. Our strategy focuses on verticalized applications, that have demonstrated actual utility in certain industries and have traction. This a different strategy to a lot of the larger funds where you see them deploying large amounts of capital, into very talented AI teams that plan to change the entire world and are very horizontal. Our message to our investors is that’s fine, you can do that, but you can also have a play with Touring, which is this very focused strategy at the series B, more application-level software, that's powered by AI.

How do you Identify an opportunity?

We are looking for capital efficient companies. Companies where founding teams are passionate about a specific industry problem that they want to solve. They are being pragmatic about how they use AI and being thoughtful about computational capital and building moats based on data and the data advantage. I believe we can find founders like that all around the world.

Touring’s Portfolio

We've invested $25 million in our first investment, Pixis, which provides AI-powered marketing solutions. Our second investment has been in Netradyne, aleading provider of fleet management software. Both of these companies have something in common - you could call them vertically integrated AI companies, but they're very focused on their use cases and there is a significant amount of AI capability that is embedded in both. We’ve also backed cybersecurity software company Exaforce and Numa, whose AI-powered software is used by US car dealerships to enhance customer service operations. Of the six investments we have so far, four are existing relationships with founders we have known for a long time. The first two investments are de risked in that they're a little bit later stage and will likely have shorter holding periods. The two most recent deals are true Series B lead opportunities that we ended up leading.