The popular open source AI tool Ollama has raised a $65 million Series B, led by Theory Venture, founder and CEO Jeff Morgan tells TechCrunch.  

This round follows a previous $15 million Series A led by Benchmark’s Peter Fenton. All told, the company has now raised $88 million.  

Ollama, which launched in 2023, helps devs run open-weight AI models on their PCs, getting them up and running in minutes. It has been praised by developers across countless training sites, videos, blogs and social media posts. It has amassed 176,000 stars and nearly 17,000 forks on GitHub.  

Developers can also use Ollama to find models and access larger, more complex ones that it hosts on its neocloud via several subscription tiers, from free to $100/month. It also tracks usage based on GPU time, not token limits. 

If the mission to help developers more easily build on their PCs sounds vaguely familiar, it should. Morgan and his co-founder Michael Chiang previously helped build Docker Desktop. They landed at Docker after it bought their previous startup, Kitematic. Docker makes containers that help cloud apps easy to move from cloud to cloud, or from desktop to cloud, abstracting away all the pesky hardware configuration issues.

So Ollama essentially did for AI what Docker and Docker Desktop did for cloud. 

“Open models started coming out in 2023 but they were really hard to use,” Morgan said. They had been geared toward researchers at the time, not programmers. “As a result, it was really hard to get them up and running.” Three years after launching, Ollama is now “used by over 8.9 million developers every month, sitting in 85% of the Fortune 500 and growing like crazy,” he said. All with only 14 employees.

That career experience is what drew Benchmark’s Peter Fenton to lead its earlier round and join the board.

“What Jeff and Michael built with Docker is being used by 10 million-plus developers every day. The creative powers to create a product that goes to ubiquity for developers is extremely rare,” Fenton told TechCrunch. 

Morgan and Fenton declined to discuss the startup’s revenues and new valuation. However, Morgan says that the proving point for Ollama as a business happened around January, when OpenClaw became hot. That’s when larger open models “suddenly became able to do these agentic tasks, like coding. Obviously, we saw the explosion of the assistants like OpenClaw, and this idea that open models can get real work done.” 

Since then, the industry has been abuzz with the idea that paying users (particularly deep-pocketed enterprises and fast-growing AI application-layer startups) will increasingly turn to more affordable open models, reserving their use of closed models like Anthropic for more of an as-needed basis. 

“I still think that this is the part that most of the debate gets wrong. It’s not an either/or,” Fenton says of open versus closed AI models. There will be plenty of business for both, he contends. However, every company with high inference expenses  — the costs of using the models  — has a “vital existential project” pushing them to move “to open-weight models,” he says.

There’s plenty of evidence that such startups and enterprises are already turning to open models for their daily needs. That, obviously, bodes well for Ollama’s cloud business.

But even more interesting, Ollama is another example of how AI is birthing a large new crop of open source projects that are turning into companies pursued by VCs. There are open source inference providers like Inferact, maker of vLLM, and RadixArk, maker of SGLang. There is OpenClaw and its alternatives like NanoClaw. There are even tiny startups building their own open models from scratch, like Arcee.

To be sure, not every Ollama fan has been happy that the company has been pursuing making a living. About a year ago, a bunch of blog and social media posts complained that its cloud business was drawing attention away from its beloved free project and cited Ollama as an example of the so-called “Enshittification” of dev tools, as the trend is called.  

But Morgan sees its cloud service as an evolution of its open source mission to help programmers find and easily use models. Those state-of-the-art, large, open models are often “too big to run on your own computer. So we said, ‘Hey, let’s help find the compute for that,’” he explained. 

Board member Fenton adds, “Nothing has changed for the core product that’s free on the desktop. There’s zero change to the premise that this is the place you can discover and run local models.”

Microdramas are such a rage these days that nearly every kind of company in the attention economy space — be they dedicated microdrama apps, social media giants (TikTok and Instagram) or streaming services (Peacock, Amazon Prime and India’s JioHotstar) — is building a product to tap the opportunity.

Character.ai, which lets people chat with customized AI avatars, is also tapping this budding market by producing its own microdramas using AI characters. But there’s an interesting twist that takes advantage of the company’s core product: Users older than 18 can chat with these shows’ characters, ask them questions, and even roleplay different storylines.

The startup is launching three microdramas to start with: a romance series dubbed “Last Summer,” a horror show titled, “The Nighttime Game,” and a Hunger Games-like survival microdrama called “Eden Fall.”

Character.ai says these dramas were created using AI production tools, and in the long term, it aims to help users create their own characters and series.

“Starting with a studio-led model, c.ai Series lets our production team develop the format, refine the workflow, and understand what audiences want from Character-native Microdrama entertainment. Over time, the goal is to turn those learnings and workflows into creator tools, enabling users to make their own series from original Characters and share them with a global audience,” a company spokesperson told TechCrunch.

This is the latest in a slew of recent features from the startup following its shift towards entertainment-focused features last year. In April, it teased a tool called Lorebook that users can employ to create world-building information that characters can reference, and launched another feature called Books that lets users insert themselves into select classic literature titles, or role-play as characters from them.

The company said on Thursday that it is also testing a feature, dubbed c.ai FM, that will let users put together audio series, and another that lets you create fiction, called c.ai Reads. The audio series feature is currently available to select users under its experimental c.ai Labs program, which the company says professional writers are using to create serialized audio dramas.

There’s certainly an audience for this form of entertainment. Users spend more than 950 minutes on Character.AI each month in the first half of 2026, according to Sensor Tower.

Nandan Nilekani, co-founder of Indian IT services giant Infosys, will no longer serve as a general partner at Fundamentum Partnership, the venture capital firm he co-founded nearly a decade ago.

Nilekani (pictured above) will be stepping down from his role as Fundamentum launches its third fund, targeting to raise about $200 million. He will be the fund’s anchor investor, and continue advising the firm and mentoring portfolio companies, his co-founder Sanjeev Aggarwal told TechCrunch.

Aggarwal described the shift as “just a title thing,” saying Nilekani would continue to advise the firm, mentor portfolio company founders, and provide strategic guidance. “He is an integral part of our firm. The one thing that he enjoys the most is mentoring the teams that we back, and he will continue to do so in Fund III.”

Nilekani, 71, is one of India’s best-known technology leaders. Besides co-founding Infosys, he led the creation of Aadhaar, India’s biometric identity system, and has been a leading advocate of the country’s digital public infrastructure, including the Unified Payments Interface (UPI), a real-time payments network used by hundreds of millions of Indians. He has championed the Open Network for Digital Commerce (ONDC), an initiative aimed at making e-commerce more open and interoperable in the country.

Nilekani started Fundamentum in 2017 with Aggarwal, who previously helped build Helion Venture Partners. Fundamentum backs Indian startups at the Series B stage and later, and its portfolio includes used-car marketplace Spinny, online pharmacy PharmEasy, audio storytelling platform Kuku FM, and AppsForBharat, the developer of the Sri Mandir devotional app.

Nilekani did not respond to an emailed request for comment.

The leadership change also broadens Fundamentum’s senior investment team. Alongside Aggarwal, Fund III will be led by Prateek Jain, who joined Fundamentum at its inception in 2017; fintech investor Mayank Kachhwaha, who joined ahead of Fund II; and finance chief Sanjay Chaturvedi, who has been with the firm for nearly a decade.

Fundamentum’s third fund aims to back eight to ten early-stage startups building consumer technology, fintech, and AI products, and issue initial checks of about ₹100 crore (around $10.5 million) each. The firm has yet to announce a first close, but has already begun deploying capital, Aggarwal said, adding that he expects the fundraising to conclude over the next 12 to 18 months.

Fund III will see Nilekani making his largest-ever commitment to a venture capital fund, Aggarwal said, though he declined to disclose the investment amount. The fund, Aggarwal said, expects to raise roughly half of its target from international investors, and the remainder from Indian institutions, family offices, founders and the firm’s partners.

That balance reflects how India’s venture capital ecosystem has evolved over the past decade: Indian investors today play a much larger role in domestic funds than they did when Aggarwal helped launch Helion Venture Partners in the mid-2000s.

“When we launched Helion, there was no domestic capital in the country, and all the capital was raised from the U.S.,” Aggarwal said. “Over the last five years, we are experiencing very strong interest in Indian investors to back venture capital firms […] Now you can build a venture firm with domestic capital.”

Aggarwal told TechCrunch that Fundamentum sees India’s biggest AI opportunity in applications that are built on existing global models, particularly across financial services, content, and vernacular consumer applications.

The stance underscores how much of India’s AI ecosystem centers on application-layer startups rather than those developing frontier AI models, unlike the U.S. and China, where companies have attracted billions of dollars to build AI models.

The leadership reshuffle follows the departure of general partner Ashish Kumar, who recently launched AI-focused venture fund Fundamentum Frontier Advisors (F2A), which also has Nilekani as an anchor investor. F2A, Aggarwal said, is a separate firm with no operational connection to Fundamentum, and Kumar is not involved in Fund III.

Fundamentum has made 17 investments across its first two funds. Aggarwal told TechCrunch the firm has returned about half of the capital from its first fund to investors, and the second fund is now focused on follow-on investments.