The Financial Burden of Going Public for Software Companies

This chapter examines the escalating expenses related to taking software companies public, focusing on legal and regulatory fees that have surged over time. It addresses the challenges faced by smaller, high-growth companies in navigating these costs and explores emerging venues that may provide better opportunities for them.

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Tomasz Tunguz has spent almost two decades turning data into investment insights. After an impressive run at Redpoint Ventures, where he backed Looker, Expensify, Monte Carlo, and more, Tomasz launched Theory Ventures in 2022. His debut fund, which closed at $238 million, was followed 19  months later by a $450 million second fund.

Theory’s goal is simple but striking: to build an “investing corporation” where researchers, engineers, and operators sit alongside investors, arming the partnership with real‐time market maps, in‑house AI tooling, and domain expertise. Centered on data, AI, and crypto infrastructure, the firm operates at the very heart of many of today’s most consequential technological shifts.

In our conversation, we explore:

• How Theory’s “investing corporation” model works

• Why crypto exchanges could create a viable path to public markets for small-cap software companies

• The looming power crunch—why data centers could consume 15% of U.S. electricity within five years

• Stablecoins’ rapid ascent as major banks route 5‑10% of U.S. dollars through them

• Why Ethereum faces an existential challenge similar to AWS losing ground to Azure in the AI era

• Why Tomasz believes today’s handful of agents will become 100+ digital co‑workers by year‑end

• Why Meta is betting billions on AR glasses to change how we interact with machines

• How Theory Ventures uses AI to accelerate market research, deal analysis, and investment decisions

• Much more

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