Index Raises $3.1 Billion to Support New Wave of Founders, Everywhere

by Index Ventures

An artistic take on our logo. We chose the hand as our mark symbolizing the humility, care and effort of entrepreneurs building their businesses. It also stands for our commitment to them as partners in realizing their vision.

In this post: Jan Hammer, Mike Volpi

Disruption, innovation and resilience were the defining traits of the past year. The turmoil of COVID forced an acceleration of tech trends already in the making, and created massive opportunities for transformation in both our professional and personal lives. During the pandemic, Americans started 4.4 million businesses—the biggest increase on record. A similar boom was experienced by countries like the UK, Germany, Japan, France and others.

While the pandemic was devastating in so many ways, COVID-related restrictions created an opening for founders to re-imagine our world, transcending physical boundaries. Companies and people had to adapt to the digital world seemingly overnight, challenging the established norms of the traditional work contract. This phenomenon really resonated with us at Index, as we’ve always seen ourselves as a distributed, global company. It’s been thrilling to witness a fresh generation of founders, with bolder, more global ideas and endeavours. Driven by values, a desire to make a positive impact, and a commitment to co-create a better collective future, the companies that emerge from this era will be the force that shapes the decades to come.

With $3.1 billion in new funds we’re excited to support this next wave of founders, across all stages and geographical locations. The new funds are spread across stages: early-stage fund Index Ventures XI ($900m), growth fund Index Ventures Growth VI ($2bn), and previously announced seed fund Index Origin ($200m)—together helping companies build and scale from Seed to IPO and beyond.

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We spoke to our Partners Mike Volpi and Jan Hammer about what these new funds mean for entrepreneurs, which industries are most ripe for disruption and what the future holds for Index.

As veterans of the industry, why do you think it’s important to fund this next generation of entrepreneurs?

"Capital is a commodity, but the relationships it comes with can’t be commoditized. If you can get money anywhere, you'd rather take money that comes with a long-term partner that has a transformational impact on your ability to build your business."
— Mike Volpi, Index Ventures

JH: I've been in this business for 18 years and have seen multiple shocks—geopolitical events, and also different business cycles, including stock market cycles like the financial crisis of 2008. Stepping back from it all, every single one of those shake-ups has resulted in a greater and deeper bench of new initiatives. It's really provided a springboard to more innovative businesses—and downstream for investors, those new companies have provided an investment opportunity. So if the past is any indicator of what's to come, I would say there will emerge a new cohort of more amazing companies out of this crisis than really anything we've seen before.

MV: We're going to see innovation happening in unexpected places, in terms of both sectors and geographies. At the same time, what used to be venture capital’s primary product— capital —is no longer its main selling point. The next generation of entrepreneurs is looking for expertise and personal relationships with their investors, where we become partners, advisors, mentors and coaches. Capital is a commodity, but the relationships it comes with can’t be commoditized. If you can get money anywhere, you'd rather take money that comes with a long term partner that has a transformational impact on your ability to build your business.

Where do you see opportunities for innovation in the post-COVID world?

"The essence of entrepreneurship is positivity— trying to overcome obstacles and turning them into opportunities."
— Jan Hammer, Index Ventures

JH: Forced digitization has opened up a whole new set of opportunities. From ordering food to software companies selling multi-million dollar licenses remotely, that substitution effect has cut across all sectors, from consumer to enterprise. It’s also accelerated the trend of technology underpinning every sector. The essence of entrepreneurship is positivity— trying to overcome obstacles and turning them into opportunities. We've seen that across the board, both within our own portfolio as well as externally in newly-born companies, and those that have started scaling during the pandemic.

What will be the investing focus for these new funds?

MV: At Index, we believe in partnering with founders from the beginning of their journey through their IPOs. These funds will support new ventures through all of the stages of growth, from ideation to maturity. We’ll be investing in companies across sectors, particularly in consumer, enterprise, software infrastructure, gaming and fintech, where we’ve established leadership and expertise. We continue to see a lot of opportunity here, while of course we remain open to exploring other new and exciting areas.

"We want to support creative founders who are building technology in a smart way to provide great products and services to the economy."
— Jan Hammer, Index Ventures

JH: We're doubling down on what I call the “people dimension”—looking for authentic entrepreneurs building mission-driven businesses, playing into ever-larger or ever-expanding markets. We want to support creative founders who are building technology in a smart way to provide great products and services to the economy.

Robinhood co-founders Vlad Tenev (left) and Baiju Bhatt (right) with Index Partner Jan Hammer (center), backed by Index starting at Seed

Deliveroo CEO & co-founder William Shu (left) and Farfetch Chief Strategy Officer Stephanie Phair (right) with Index Partner Martin Mignot (center)

Roblox CEO & Co-founder David Baszucki (left) with Index Partner Neil Rimer (right)

How do you know someone’s right for Index?

"[Great entrepreneurs] have a new way in which they see the world, and opportunity within it...They want to move things forward, with this sort of restlessness about them which is all about executing against that vision."
— Mike Volpi, Index Ventures

MV: That part actually hasn't changed that much. Great entrepreneurs have a vision of where they can take their business—they're not just building a better mousetrap. They have a new way in which they see the world, and opportunity within it. And they couple that with drive and persistence. They want to move things forward, with this sort of restlessness about them which is all about executing against that vision. But it isn't just about the best technology, it isn't just about the best vision, it's about producing a set of products that consumers or businesses love. It’s those three characteristics of vision, drive and commercialism, we often find inside of successful entrepreneurs we work with.

What do these new funds mean for where Index is going in the future?

"With this latest announcement, we’ve built out a platform that allows us to continue partnering with the most iconic entrepreneurs, helping them build companies step by step that endure through business cycles."
— Jan Hammer, Index Ventures

MV: At Index, these funds are invested by a single group of people from day one through IPO. There are no hand-offs across teams from seed, to venture, to growth. That's very different from the approach taken by other investors. Today’s entrepreneurs are looking for a more seed-to-IPO kind of a journey, and at Index, we want to support entrepreneurs from the moment they think of the business until the moment they stand on the podium at one of the world’s exchanges and ring the bell. To fulfill the commitment we make to founders, we have to be partners through the full journey. As venture capitalists we do “invest,” but 90% of our time is dedicated to helping entrepreneurs grow. If you just get something passed on to you by a colleague and you don't understand its history—the why or where it came from—we don't think you can give as valuable of a product to founders.

JH: I’d go as far as saying we're not announcing new funds—we're really announcing a platform. It comes down to a unified brand across continents, sectors and, most importantly, stages. A notion of a particular time window for assistance isn’t useful to the entrepreneur. They need to know you’re there for the long haul. With this latest announcement, we’ve built out a platform that allows us to continue partnering with the most iconic entrepreneurs, helping them build companies step by step that endure through business cycles.

What’s different about Index?

MV: Entrepreneurship is a journey of ups and downs. To us, being a true partner through the whole journey means keeping founders’ feet on the ground when they're high, and lifting them up when they're low. That’s what sets us apart. We love to invest in people that become our best friends, so we can be there for them on a deep, personal level.

"To us, being a true partner through the whole journey means keeping founders’ feet on the ground when they're high, and lifting them up when they're low."
— Mike Volpi, Index Ventures

JH: I describe our differentiators as the three Cs:

  • Character: We differentiate ourselves by being human, questioning everything and remaining authentic, not transactional.
  • Competency: We hone our sector-specific expertise, allowing us to advise founders in fast-changing markets such as fintech, open source, artificial intelligence and consumer.
  • Camaraderie: We invest under one roof of partnership, as a global team. Embodying one of the Index values: “We Are Family.”

Living by these three C’s means we can back the best companies without compromising our integrity.

Why do you love what you do?

MV: It’s a real privilege to take part in these amazing journeys this role opens up to us. Some of the smartest people in the world step out of the elevator at our office to share their ideas and passions. Every day we’re learning something new, and it’s so rewarding to see the creation—not just the monetary value, but of organizations that change the trajectory of people's lives.

"The entrepreneurs we work with really deserve our thanks, and they’re the real reason we love what we do."
— Jan Hammer, Index Ventures

JH: There are a thousand things I’d like to share about why I love what I do. It's a constantly challenging, ever-changing kind of work, and it never ends. The inflow of stimulating, exciting startups that have the potential to make a big difference in the world is thrilling. The entrepreneurs we work with really deserve our thanks, and they’re the real reason we love what we do.

Published — July 22, 2021