Index Ventures Global Finance has announced $2.3 billion in funding for the next generation of tech startups worldwide. The new funds are divided into different stages, with $800 million allocated to venture capital and $1.5 billion to early-stage and late-stage companies.
How do these funds compare to previous funds? In 2021, Index Ventures achieved Starch $900 million for Index Ventures XI and $2 billion for Index Ventures Growth VI, and it also has a separate early-stage fund. The company raised $300 million in 2022 for its seed fund, Index Origin II.
So this fund is a little bit smaller. But the company says it’s just about raising the right amount for the current market. Index says it’s only been a few weeks into this fundraising and has raised the money entirely through its existing limited partner base.
“We’re in a really fortunate position where we raised our money in a few weeks from basically existing limited partnerships, and we’ve already exceeded the threshold,” Nina Achadjian (pictured left), a partner at Index based in San Francisco who focuses on B2B enterprise software, SaaS, and AI, told TechCrunch.
“We were very careful about the size of the funding,” she added. “I think it would be very easy to continue to raise larger amounts. We took a bottom-up approach and looked at: What are the growth round sizes that are happening now? Where are the opportunities in the venture capital space?”
For venture capital, the company divides these rounds into two categories: AI and other. AI seed and Series A rounds are much larger than the average funding round. But non-AI Series A rounds tend to be a bit smaller these days. That’s why it’s more or less even, and Index Ventures has raised roughly the same amount on that front.
As for late-stage deals, the average size of late-stage rounds has declined significantly since 2021. That’s why this year’s growth fund is smaller.
“We’re not thinking about asset pooling. I think other companies in the industry that have gotten big have already moved toward asset pooling, which is a completely different strategy,” Shardul Shah (pictured right), a New York-based partner at Index who focuses on institutional investing, infrastructure security and artificial intelligence, told TechCrunch.
Artificial Intelligence as an Accelerator of Innovation
Meanwhile, the team believes that recent advances in AI represent a major advance in technology and could fuel a new wave of startup opportunities.
“I think at this point, there’s a real reassessment of the underlying models,” Achadjian said. “It looks like it’s kind of a consolidation of three or four companies. There seem to be some open questions about security, delivery costs — inference costs — and also how these things are going to scale over time.”
“But I think there’s actually a huge opportunity once these questions are answered for a lot of entrepreneurs to build on these building blocks to add real value that’s not just a feature,” she added. “The best may be yet to come” in AI, she said.
AI also creates investment opportunities in new industries for venture capital firms, Shah added. Manufacturing, drug discovery, and legal services, for example, are not typically tech-driven. But AI could become a catalyst for innovation in these verticals in the coming years.
With this in mind, Index Ventures will remain an opportunistic investment firm investing at all stages across 24 technology ecosystems, from North America to the UK, Europe and Israel. The firm has offices in San Francisco, London and New York but pursues a global strategy with global funds, a single unified team and funds that are not sector-specific as the tech industry changes at a rapid pace.
When we look at Index Ventures’ investment portfolio, we find that it includes some of the most successful tech companies of the past few years, such as Figma, Revolut, Roblox, Scale AI, and Wiz. Over the past 28 years, Index Ventures has funded 108 startups, 23 startups, and 57 companies that have gone public. There’s no reason to change an already successful formula.