Index Ventures Unveils $1.9B Tech Startup Fund

Index Ventures has unveiled a substantial new financial commitment to foster the next wave of tech startups on a global scale. This latest funding initiative encompasses a multi-stage approach, with \(400 million earmarked for venture investments and \)1.5 billion allocated to growth and late-stage companies.

Comparing the New Funds to Previous Rounds

In 2021, Index Ventures raised \(900 million for Index Ventures XI and \)2 billion for Index Ventures Growth VI. Additionally, the firm introduced a separate early-stage fund, raising $200 million for its seed fund, Index Origin II. While the current fund is slightly smaller, the firm asserts that this aligns with the current market requirements. The fundraising process was notably swift, taking just a few weeks and relying entirely on existing limited partners (LPs).

Nina Achadjian, an Index partner based in San Francisco, emphasized the deliberate approach to the fund sizing, stating, “We were very intentional about the size. I think it would be very easy to just continue raising larger funds. And we had a bottom-up approach and looked at the sizes of growth rounds happening right now. Where are the opportunities in venture?”

Strategic Allocation of Funds

Index Ventures has strategically divided its venture investments into two categories: AI and other sectors. AI funding rounds at the seed and Series A stages are considerably larger than average, while non-AI Series A rounds are experiencing a slight contraction. This stratification ensures a balanced approach to funding.

For late-stage deals, the landscape has shifted dramatically since 2021, with a significant reduction in the average size of late-stage rounds. This change is reflected in the smaller growth fund for this year. Shardul Shah, an Index partner based in New York, pointed out, “We don’t think about aggregating assets. Other firms in the industry have moved towards asset accumulation, which is a totally different strategy.”

AI as an Accelerator to Innovation

The Index team believes that advancements in artificial intelligence represent a crucial technological breakthrough, opening new avenues for startup opportunities. Achadjian remarked, “At this moment, there’s a real reckoning of the foundation models. There are still open questions around security, the cost of delivering these inference costs, and how these technologies will scale over time. However, once these questions are answered, there is a huge opportunity for entrepreneurs to build upon these foundations.”

Shah added that AI also creates investment opportunities in traditionally non-tech sectors, such as manufacturing, drug discovery, and legal services. These industries could see significant innovation driven by AI in the coming years.

A Global and Opportunistic Approach

Index Ventures maintains a global strategy with a unified team and funds that are not confined to specific verticals. This approach allows the firm to remain agile and responsive to the rapid changes in the tech industry. With offices in San Francisco, London, and New York, Index Ventures is well-positioned to invest across various tech ecosystems, from North America to Europe and Israel.

The firm’s investment portfolio includes some of the most successful tech companies of recent years, such as Figma, Revolut, Roblox, Scale AI, and Wiz. Over the past decade, Index Ventures has funded numerous unicorns, decacorns, and companies that have gone public, demonstrating a proven track record of successful investments.

The future looks promising for Index Ventures as it continues to support innovation and growth in the tech sector, leveraging its extensive experience and strategic approach to investment.