When Amit Garg and Sanjay Rao began pitching their AI-focused venture fund in 2019, prospective limited partners kept asking the same question: Was artificial intelligence big enough to sustain an entire investment thesis? Regulatory filings show those doubters have been answered. Tau Ventures, the Palo Alto seed-stage firm the pair founded, submitted paperwork for Fund III on July 14, according to Securities and Exchange Commission disclosures.
The firm now oversees more than $93 million as of December 2025 across three funds and two special purpose vehicles, with 80 companies in its portfolio. Among them sits Assort Health, which recently achieved unicorn status at a $1.2 billion valuation when Menlo Ventures led a $120 million Series C round.
"Nobody asks us that question anymore," Garg said in an interview last year, reflecting on the early skepticism.
An Early Conviction
Tau's latest filing represents the firm's fourth vehicle since its 2019 launch. The Fund III structure includes two parallel entities—Tau Ventures Fund III L.P. and Tau Ventures Fund III (QP) L.P.—both registered under Rule 506(b). The target size remains undisclosed, listed as "indefinite" in the Form D documents. The firm declined to comment on fundraising goals.
Garg and Rao's partnership originated at Norwest Venture Partners before they decided to build their own platform. Garg arrived with two decades of experience spanning Samsung NEXT Ventures, Google, and Norwest, along with degrees from Stanford in computer science and biomedical informatics, plus an MBA from Harvard. Rao's background included stints at Microsoft and McKinsey, a failed automation startup, and dual engineering degrees from MIT paired with a Harvard MBA.
They established operations at 555 Bryant Street in Palo Alto in 2019. Initial strategy centered on seed checks ranging from $250,000 to $750,000, targeting companies roughly nine to 18 months from achieving product-market fit, according to Global Venturing. The team has since expanded to include three principals: Sam Bogrov, who covers healthcare and holds a Wharton MBA; Insoo Chang, focused on enterprise AI and fintech with a Harvard MBA; and Sharon Huang, a physician-investor trained at Stanford and Mount Sinai.
The Funnel
Tau applies what Garg describes as an unforgiving selection process. Speaking on The Sure Shot Entrepreneur podcast, he estimated reviewing 6,000 deals annually with his team before greenlighting approximately 12 investments. The math works out to a 0.2% acceptance rate, though that figure presumably includes everything from cold emails to serious pitch meetings.
The firm operates out of offices in Washington D.C., New York, Los Angeles, and San Francisco. It has assembled an advisor network exceeding 100 members—CTOs, physicians, and technology veterans including Tesla co-founder Marc Tarpenning, Microsoft Chief Medical Officer David Rhew, and SambaNova co-founder Kunle Olukotun. These advisors assist with technical due diligence and customer introductions, according to the firm.
Assets under management have climbed steadily: $85 million across three funds as of December 2022, $86.3 million as of December 2024, and over $93 million as of December 2025. Tau reported making 87 investments from late 2019 through December 2025. Portfolio companies collectively raised more than $300 million in follow-on funding during 2025 alone across 19 separate rounds.
Wins and Returns
Assort Health's ascent to unicorn status came when the company raised capital for AI agent deployment in patient journey optimization. Wing Venture Capital recognized Assort on its Enterprise Tech 30 list earlier this year.
Other recent portfolio achievements include Alaffia Health, which secured $55 million in a Series B led by Transformation Capital with participation from FirstMark, Tau, and Twine. ArmorCode closed a $16 million strategic round with Cheyenne Ventures leading. UPTIQ pulled in $25 million for its Series B, while Handl Health raised $14.2 million in a Series A led by Arthur Ventures.
Tau logged three exits before the current AI frenzy reached full intensity. Passage Identity sold to 1Password in November 2022. Armorblox went to Cisco in July 2023. RubiconMD was acquired by Oak Street Health in October 2021; Oak Street itself later became part of CVS in 2023.
The current portfolio stretches across robotic surgery with Oath Surgical, which raised $24 million last fall; enterprise security through ArmorCode; medical AI via Iterative Health and Infinitus; and automation with Vecna Robotics. Tau describes its approach as maintaining an "operator mindset" and gravitating toward technical founding teams.
Staying the Course
The 2019 wager on applied AI across healthcare, enterprise software, and automation has aged remarkably well. What began as a thesis that prompted investor doubt now drives funds magnitudes larger than Tau's initial vehicle.
Yet the firm continues writing seed checks at a similar scale. Recent investments include Keebler Health, Understood Care, Statisfy, Viven, Infinitus, and TofuHQ, according to the company's published updates. Initial checks typically land around $500,000 based on recent descriptions of the firm's strategy.
The Fund III filing suggests Tau intends to maintain this approach through at least another vintage. With first close yet to occur as of the July regulatory submission, the firm appears to be in active fundraising. The partnership structure mirrors Fund II, which filed in April 2022 and contributed to the current $93 million in assets under management.
Garg remains connected to Hospital for Hope, a nonprofit he has supported for more than two decades. He continues publishing monthly founder spotlights and portfolio updates through Tau's newsletter. The firm's thesis page still reads "AI-driven technologies in healthcare, enterprise, and automation"—the same three categories that raised eyebrows seven years ago and now support an 80-company portfolio with at least one unicorn outcome to validate the bet.
