Index raises $1.2B growth fund and $800M to invest in emerging startups

Index raises $1.2B growth fund and $800M to invest in emerging startups

It’s not quite business as usual in the world of business, but in tech, there is still a significant amount of money being raised and invested, both to help sustain the most promising startups, and to help find those emerging despite (or because of) the wider economic and social crises arising from the coronavirus pandemic. Today, one of the biggest names in VC, Index Ventures, announced that it has closed another $2 billion in funds –$1.2 billion that it plans to use for growth rounds (larger, later stage investments) and $800 million that it will put into emerging startups (smaller, earlier rounds, likely for younger companies).

At a time when it’s getting very tough for startups — which are often built not for immediate profit but growth, with big capital infusions to sustain themselves — Index will have its work cut out for it. To date, 70% of its initial investments are at Series A or earlier. Whether that will be a proportion it keeps remains to be seen.

The total amount is larger than Index’s last fund, dating from July 2018, which totalled $1.65 billion ($1 billion growth, $650,000 emerging), but it’s not clear if this was what the firm had intended to raise, or less or more. For some context, another huge VC firm, Insight Partners, last week announced a monster $9.5 billion round, which exceeded the company’s original target of just over $7 billion.

Like Insight, the focus for Index will be both to fund existing portfolio companies as well as seek out those diamonds in the rough that are being built now, a spokesperson confirmed to us.

Despite all the social distancing and tightening of purse strings due to unemployment and other indicators of economic struggle, there have been pockets of opportunity emerging around areas like delivery services, medical and healthcare technology, and of course anything that helps us live our lives in a more efficient and hopefully diversionary way online (which can come in the form of entertainment, but also better services for doing practical and necessary things, like shopping or have a work videoconference without websites falling over or getting hacked).

“Innovation is often born out of adversity,” said Jan Hammer, Partner at Index Ventures, in a statement. “The path to building a great company is not a straight line, with many obstacles and forks along the way. We take the long view and remain committed to investing in ambitious entrepreneurs at this unprecedented time.”

Yes, it is easy for a VC — who I’m guessing is probably not concerned about his income or health in the same way that a front-line healthcare worker or grocery check-out person might be — to wax lyrical about opportunity right now, but that doesn’t mean it’s not something that should be ignored. In fact, I’d argue that finding ways out of this is just as important as us all getting through it in one piece.

Chris Pontius

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