Index Ventures announces $2.3 billion in new funds to finance the next generation of tech startups worldwide. These new funds are spread across different stages, with $800 million dedicated to venture capital and $1.5 billion reserved for growth and late-stage companies.
How do these funds compare to the previous ones? In 2021, Index Ventures raised $900 million for Index Ventures XI and $2 billion for Index Ventures Growth VI, and also has a separate seed-stage fund. The firm raised $300 million in 2022 for its Index Origin II seed fund.
This fund is therefore a hair smaller. But the company says it’s just about getting the right amount for the current market. Index says it spent just weeks on the fundraising process, raising the funds entirely using its existing base of LPs.
“We’re in a really fortunate situation where our funding was raised in a matter of weeks, mostly from existing LPs, and we’re really overloaded,” Nina Achadjian (pictured left), Index’s San Francisco-based B2B business partner. software, vertical SaaS and AI, he told TechCrunch.
“And we were very intentional about the size. I think it would be very easy to continue to raise more funds. And we had a bottom-up approach and looked at, “What sizes of growth wheels are happening right now? Where are the opportunities in business?” she added.
For venture investments, the company divides these rounds into two categories: AI and others. AI seed and Series A funding rounds are much larger than the average funding round. But non-AI A-series bikes tend to be a bit smaller these days. That’s why it kind of evens out and Index Ventures raised more or less the same amount on that front.
In terms of late-stage deals, the average late-stage round size has dropped drastically since 2021. Therefore, this year’s growth fund is smaller.
“We are not thinking about asset aggregation. And to your point, I think other people in the industry who have gone big have actually moved into asset accumulation, which is a completely different strategy,” Shardul Shah (pictured right), a New York-based partner at Index who focuses on enterprise investment, infrastructure security and AI, he told TechCrunch.
AI as an accelerator of innovation
At the same time, the team believes that recent advances in artificial intelligence represent a major technological breakthrough and could fuel a new wave of startup opportunities.
“I think there’s a real showdown of the underlying models at this point,” Achadjian said. “It looks like it’s kind of consolidating into three or four companies. There still seem to be some open questions about security, the cost of delivery — those derivative costs — and how these things will scale over time.”
“But I think there’s actually a huge opportunity once these questions are answered for a lot of entrepreneurs to build real added value on top of these building blocks that isn’t just a feature,” she added. According to her, “the best may be yet to come” in the AI space.
Shah added that artificial intelligence is also creating investment opportunities in new industries for venture capital firms. For example, manufacturing, drug discovery, and legal services are not typically industries that use technology. But AI can become a catalyst for innovation in these verticals in the coming years.
With this in mind, Index Ventures will remain an opportunistic VC firm investing at all stages 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 has a global strategy with global funds, a single unified team and non-sector-specific funds as the technology industry changes at a rapid pace.
And if you look at Index Ventures’ investment portfolio, it includes some of the most successful tech companies of recent years, such as Figma, Revolut, Roblox, Scale AI and Wiz. Over the past 28 years, Index Ventures has funded 108 unicorns, 23 decacorns and 57 IPOs. There is no reason to change a recipe that already works.