Index Ventures announces $2.3 billion in new funding to fund the next generation of technology startups globally. The new funds are split across multiple stages, with $800 million dedicated to venture capital investment and $1.5 billion earmarked for growth and late-stage companies.
How do these funds compare to previous ones? In 2021, Index Ventures raised $900 million for Index Ventures XI and $2 billion for Index Ventures Growth VI, and it also has a separate seed fund. The company raised $300 million in 2022 for its seed fund, Index Origin II.
So this fund is a little smaller. But the firm says it’s simply raising the right amount for the current market. Index says it only spent a few weeks on this fundraising process and raised the money entirely from its existing LP base.
“We’re in a really fortunate situation where our funds were raised in a matter of weeks primarily from existing LPs, and we’re really oversubscribed,” Nina Achadjian (pictured left), a San Francisco-based partner at Index focused on B2B enterprise software, vertical SaaS, and AI, told TechCrunch.
“We were very careful about size. I think it would be very easy to continue to raise larger funds. We took a bottom-up approach and asked ourselves, ‘What are the sizes of the growth cycles that are happening right now? What are the opportunities in venture capital?’” she added.
For venture capital investments, the firm divides these rounds into two categories: AI and non-AI. AI funding rounds at the seed and Series A stages are much larger than the average funding round. But non-AI Series A rounds tend to be a bit smaller these days. So it kind of evens out, and Index Ventures has raised roughly the same amount on that front.
In terms of late-stage transactions, the average size of late-stage financing rounds has fallen drastically since 2021. That’s why this year’s growth fund is smaller.
“We don’t think about asset aggregation. And I think, to your point, other players in the industry that have gotten bigger have actually moved toward asset accumulation, which is a totally different strategy,” Shardul Shah (pictured right), a New York-based Index partner who specializes in corporate investing, infrastructure security and AI, told TechCrunch.
AI as an innovation accelerator
At the same time, the team believes that recent advances in artificial intelligence represent a significant technological breakthrough and could foster a new wave of opportunities for startups.
“I think right now we’re revisiting our core models,” Achadjian said. “It seems like there’s a focus on three or four companies. It seems like there are still some questions around security, the cost of implementing (those inference costs) and also how these things are going to evolve over time.”
“But I think once those questions are answered, there’s a huge opportunity for many entrepreneurs to build on those building blocks to actually add value, not just functionality,” she added. “The best may be yet to come” in AI, she said.
Shah added that AI also creates investment opportunities in new sectors for venture capital firms. For example, manufacturing, drug discovery and legal services are not typically technology-driven sectors. But AI could become a catalyst for innovation in these verticals in the years to come.
With this in mind, Index Ventures will remain an opportunistic venture capital firm investing at all stages of development in 24 technology ecosystems, from North America to the UK, Europe and Israel. The firm has offices in San Francisco, London and New York, but it has a global strategy with global funds, a single, unified team and funds that are not specific to a specific vertical, as the technology sector evolves at a rapid pace.
And when you look at Index Ventures’ investment portfolio, you’ll see that it includes some of the most successful tech companies of recent years, like Figma, Revolut, Roblox, Scale AI, and Wiz. Over the past 28 years, Index Ventures has funded 108 unicorns, 23 decacorns, and 57 IPOs. There’s no reason to change a recipe that already works.
