Published On: Wed, Feb 3rd, 2016

Index Ventures Has A New, $550 Million Fund, And A New Partner

When yesterday, the keyboard developer Swiftkey was reported to be acquired by Microsoft for $250 million — about 10 times what it lifted from investors — it seemed only another success in a string for Index Ventures, a try organisation with offices in San Francisco, London, and Geneva.

Indeed, a now 20-year-old try organisation has had a unequivocally good run of things, with 8 companies in a portfolio going open over a final dual years, including Pure Storage, King, Just Eat and Hortonworks, while many other companies have grown extremely given a firm first wrote them a check, including BlaBlaCar, Funding Circle, Deliveroo, Slack and Sonos.

No consternation Index has only sealed its eighth early-stage try firm, a $550 million pool that it skeleton to deposit in a U.S. and Europe in equal parts. (The firm had lifted around a same volume for a seventh early-stage fund, sealed in 2014.)

Index — whose U.S. partners embody organisation cofounder Danny Rimer, former Cisco arch plan officer Mike Volpi, and former Dropbox conduct of product Ilya Fushman — has also promoted to partner Shadul Shah. Shah had joined a organisation from Summit Partners in 2008 as an associate.

We spoke earlier this week with Volpi and Shah about a new fund. We also talked about how they concurrently conduct the firm’s $706 million expansion fund, sealed in Apr of final year; how closely a group will be operative with former Twitter CEO Dick Costolo, who assimilated Index as a try partner progressing this month; and where they’ll be selling in 2016. Our discuss has been edited for length.

TC: Mike, in the U.S., where we non-stop an bureau in 2011, you’ve now left from dual partners — you and Danny — to four, and a try partner. How concerned will Dick Costolo be, exactly?

MV: Yes, we have utterly a bit some-more manpower here in a U.S. Dick is roughly half time with us and half time with a aptness startup that he’s incubating in a offices. He’ll be sponsoring investments, holding house seats — doing a full gig during Index, though half a time.

TC: Shardul, you’ve been focused on craving investments for a firm. 

SS: Yes, for a last three years, I’ve been focused on craving and within that, confidence and developer services. we consider we’ll continue to double down on those themes, as good as extend into [related] themes.

TC: You also lifted a hulk expansion account final year. How most overlie is there with your earlier-stage efforts?

MV: When we’re vehement about [a startup in our] try portfolio, we’ll double down on a expansion fund, though a investments are mostly de novo. I’d contend about 20 percent of a companies [were also formerly corroborated by Index as early-stage companies].

TC: And is anyone focusing on expansion in particular? Do we have any apart group members?

MV: No, any of us is investing in all from pre Series A to expansion investments. We asian around themes initial and stages second.

TC: You contend that 7 out of 10 of your investments are seed ore pre-Series A bets, and that we demeanour for 20 to 25 percent tenure with those checks.

MV: It’s typically before there are any explanation points about scalability. Once a association has demonstrated that a product or use works and that there’s a trail to accelerating a growth, [we start meditative about] Series C and D rounds.

TC: You wouldn’t seem to have a lot of bandwidth for those after investments.

MV: That’s been one of a challenges, a lot entrance a approach and not sufficient bandwidth to cover it. But Index isn’t only partners. We have a clever and up-and-coming group of associates and principals who assistance us demeanour during things. Growth-stage companies tend to have most some-more information to differentiate through, and that’s where a group unequivocally helps us in doing analytics.

TC: You’ve invested in all kinds of things. What are we tracking for 2016? Mike, we know we were privately meddlesome in bitcoin and had bought some in late 2013.

MV: We’ve done dual investments, in Xapo and Bitpay, that we’re assisting along. Bitcoin has left by a unequivocally engaging theatre over a final 12 months, where a banking itself went up, afterwards down, afterwards approach adult again. Now there’s this discuss about a length of a blockchain. We still trust in it, though it’s going to be a prolonged tour and we’re generally coaching [our entrepreneurs] to take a long-term viewpoint and don’t spend a lot of income and wait for things to settle out.

TC: Shardul, what about AI and VR and all a other things that people are now articulate about?

SS: AI is certainly very interesting. The volume of discriminate in a last five years and information estimate has grown such that Google, DeepMind and others can yield responses most some-more fast shaped on things like AI. We’re profitable courtesy to applications of AI in areas like messaging, first-party applications and companies that are shaped around a ecosystem of Slack [whose new, $80 million try fund is corroborated partly by Index].

TC: What do we make of a open markets and this extraordinary miss of IPOs?

MV: It’s a wily time to go public, though we wouldn’t contend it’s unconditionally unreceptive. [The workplace partnership company] Atlassian staged a unequivocally successful IPO in December.

TC: You aren’t disturbed about valuations removing squeezed?

MV: From a viewpoint of a VC, it’s a double-edged sword. For a portfolio, it’s not good when valuations go down, though it also gives us an event to deposit and get improved deals. It’s part of the healthy march of a business we’re in, so it hurts us and it creates opportunities.

Featured above: A snapshot of Index Ventures’s San Francisco office.

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