Index Ventures, a prominent venture capital firm, has announced the launch of new funds totaling $2.3 billion to support the next generation of tech startups globally. These funds are divided into two categories, with $800 million dedicated to venture investment and $1.5 billion allocated for growth and late-stage companies.
Compared to their previous funds, this new round is slightly smaller. In 2021, Index Ventures secured $900 million for Index Ventures XI and $2 billion for Index Ventures Growth VI, in addition to a separate early-stage fund. However, the firm emphasizes that raising the right amount for the current market was their priority. They were able to raise the funds quickly, solely from existing limited partners (LPs), and were oversubscribed.
Nina Achadjian, an Index partner based in San Francisco, stated that the firm took a deliberate approach to determine the fund’s size. Instead of simply raising larger funds, Index Ventures conducted a bottom-up analysis of the market and identified the sizes of growth rounds and opportunities in venture capital.
When it comes to venture investment, Index Ventures classifies rounds into two categories: AI and non-AI. While AI funding rounds at the seed and Series A stages tend to be larger than average, non-AI Series A rounds have become smaller in recent times. As a result, the overall amount raised by Index Ventures balances out.
In terms of late-stage deals, the average size of funding rounds has significantly decreased since 2021. This trend influenced the decision to create a smaller growth fund this year.
Shardul Shah, an Index partner based in New York, emphasized that Index Ventures does not focus on aggregating assets like other firms in the industry. Instead, they prioritize a different strategy centered around enterprise investing, infrastructure security, and AI.
The team at Index Ventures recognizes the potential of artificial intelligence (AI) as a catalyst for innovation and startup opportunities. They believe that recent advancements in AI represent a significant breakthrough in technology. Despite some remaining questions regarding security, delivery costs, and scalability, the team sees a vast opportunity for entrepreneurs to build upon the foundations laid by existing AI models and create value beyond mere features.
Shah further explained that AI can also revolutionize traditionally non-tech industries such as manufacturing, drug discovery, and legal services. This opens up new investment opportunities for venture capital firms like Index Ventures.
With this in mind, Index Ventures remains an opportunistic VC firm that invests across all stages in 24 tech ecosystems worldwide. They have offices in San Francisco, London, and New York, but their strategy is global, with unified teams and funds that adapt to the rapidly changing tech industry.
Index Ventures’ investment portfolio includes some of the most successful tech companies in recent years, such as Figma, Revolut, Roblox, Scale AI, and Wiz. Over the past 28 years, they have funded 108 unicorns, 23 decacorns, and 57 companies that have gone public. With such a track record, there is no need for Index Ventures to change a winning recipe.