Why Developer Tools are the Next Great Investment Opportunity

The "picks and shovels" strategy—investing in the tools that enable an industry rather than betting on individual winners within it—has produced some of the most successful investments in technology history. We believe developer tools and AI infrastructure represent the next great picks-and-shovels opportunity.

The Case for Infrastructure

Every wave of technology innovation creates demand for new infrastructure. The PC era gave us Microsoft and Intel. The internet era produced Cisco and Oracle. The cloud era built AWS, Azure, and countless supporting tools. The mobile era generated not just Apple and Google, but entire ecosystems of development frameworks, analytics tools, and backend services.

We're now in the early stages of the AI era—and the infrastructure needs are enormous.

Consider what's required to build and deploy AI-powered applications:

• Foundation models that provide baseline capabilities
• Fine-tuning and training infrastructure for customization
• Vector databases for retrieval-augmented generation
• Memory systems for maintaining context across interactions
• Orchestration frameworks for chaining AI operations
• Evaluation and testing tools for ensuring quality
• Monitoring and observability for production systems
• Security and governance tools for enterprise deployment

This is not a complete list. The AI development stack is still being invented, and new categories emerge regularly. Each category represents a potential investment opportunity.

Why Developer Tools Win

Developer tools have several characteristics that make them attractive investments:

1. Strong Network Effects

Once a tool becomes standard among developers, switching costs rise dramatically. Codebases, workflows, and team expertise all accumulate around chosen tools. This creates defensibility that's hard to achieve in application-layer businesses.

2. Developer-Led Adoption

Great developer tools often spread virally within and across organizations. Developers discover tools that make them more productive, adopt them for side projects, then bring them into their companies. This bottom-up motion can bypass traditional enterprise sales cycles.

3. Platform Potential

Successful developer tools can evolve into platforms, adding adjacent capabilities and creating ecosystems. What starts as a single-purpose tool can become indispensable infrastructure. The journey from Stripe's payment API to Stripe's full financial infrastructure illustrates this pattern.

4. Recurring Revenue

Developer tools typically generate recurring revenue through subscriptions or usage-based pricing. Once integrated into production systems, they're rarely removed. This creates predictable, durable revenue streams.

The AI Infrastructure Opportunity

Within developer tools broadly, we're particularly focused on AI infrastructure. Here's why:

The market is nascent but inevitable. Every company will eventually deploy AI in some form. The infrastructure required to do this well is still being built. Early leaders in key categories can establish positions that compound for years.

The problems are genuinely hard. AI systems introduce new challenges—stochastic outputs, context management, evaluation difficulty, cost optimization—that require specialized solutions. This isn't a market where generic tools will suffice.

Developer experience matters enormously. The difference between a good and great developer tool can determine adoption. Companies that truly understand developer needs and build exceptional products can win against well-funded competitors.

The winners haven't been determined. Unlike established infrastructure categories (cloud, databases, etc.) where incumbents have massive advantages, AI infrastructure is open territory. New companies can compete effectively.

What We Look For

When evaluating developer tools and AI infrastructure investments, we focus on several factors:

• Technical founders who've felt the pain they're solving and have the depth to build real solutions
• Clear developer value—tools that make developers meaningfully more productive, not marginal improvements
• Distribution insight—understanding of how developers discover and adopt new tools
• Platform potential—a path from point solution to broader infrastructure
• Timing alignment—products that meet current needs while positioning for future growth

Our Portfolio in This Space

Our investment in MemoryGraph.dev reflects this thesis. AI agents need memory to be truly useful—to maintain context across conversations, remember user preferences, and learn from interactions. MemoryGraph provides graph-based memory infrastructure that makes this possible.

The problem is real: anyone building AI agents quickly discovers that stateless interactions are limiting. The team is deeply technical with direct experience building AI systems. The market is timing well with the explosion of agent development. And the solution has platform potential as memory becomes a foundational capability.

The Opportunity Ahead

We believe we're in the early innings of the AI infrastructure build-out. The current focus on foundation models will shift toward the full stack of tools needed to deploy AI effectively in production. The companies building this infrastructure will create enormous value.

For investors, this is an unusual moment. The direction of technology is clear—AI will be pervasive—but the specific infrastructure winners are undetermined. Patient capital deployed now, guided by genuine technical understanding, can identify opportunities that compound for decades.

This is why developer tools and AI infrastructure are central to our investment thesis. The opportunity is large, the timing is right, and the market rewards exactly the kind of technical diligence we bring to every investment.