Index Ventures has worked with many of the tech industry's mainstays, including fintech giants Revolut and Wise, public transport app Citymapper and food delivery mainstay Deliveroo.
Index said on Wednesday that the London-based venture capital fund has raised $2.3 billion from investors to capitalize on the recent surge in AI companies in Europe and elsewhere.
“We're just beginning to see areas where AI can make a difference,” said Hannah Seal, a partner at Index Ventures. luck Wednesday. “The reason this is so timely is because we're now seeing AI really start to come to fruition, especially at the application layer.”
Seal said AI is opening up industries such as healthcare, hospitality and education, as well as areas that were previously “uninvestable.”
The venture capital firm, which has offices in London, San Francisco and New York, plans to allocate $800 million of the new capital to a venture fund and $1.5 billion to a growth fund.
Index has been a stalwart in investing in AI companies. Last year, it was one of the backers of French startup Mistral's $113 million funding round, which raised its valuation to 240 million euros ($260 million). It is now Europe's most valuable AI company, valued at 6 billion euros ($6.5 billion). Scale AI and Wordsmith are other Index investments.
To be sure, the index's funds won't be dedicated exclusively to AI companies, but there will be an emphasis on AI companies.
The new funding comes at a time when the VC industry is beginning to show signs of recovery after years of drying up, offsetting a boom in tech investment during the pandemic. Earlier this year, for example, prominent Silicon Valley VC firm Andreessen Horowitz announced $7.2 billion in new funding.
“The days of get-rich-quick schemes are over and the focus is on building companies that will last for the long term,” Mr. Seale said.
AI's “First Inning”
The world of AI is evolving every day, but “we're still in the early stages” when it comes to discovering AI's true capabilities across industries, Seal said. luck.
“Going forward, there will be much less distinctions between AI-native and non-AI companies,” she said, citing the example of mobile companies that contribute to the broader tech ecosystem. “AI will permeate every company at some point in the future.”
While we're still scratching the surface when it comes to AI, Index primarily invests in startup founders.
“When you back founders, you really have to trust that they're going to back you for the long term… [it’s their] “It's your life's mission to do this, solve this problem and build this company, and there are very few people who do that,” Seale said.
It's not a question of AI talent
While Europe has seen some notable companies emerge from the recent generative AI boom, few have achieved the scale of OpenAI or Anthropic and still have some catching up to do in the US.
“I think Europe has been catching up in terms of investment in tech startups over the last decade,” said James Wise, a partner at venture capital firm Balderton Capital. luckBrainstorm AI conference to be held in April.
“So we're still significantly behind in certain areas. But if you look at the capital being put in at almost every stage, we're closing the gap with U.S.-based companies.”
But in the fast-paced race to become a better AI leader, Europe and the UK have advantages.
Europe has a strong ecosystem of early-stage AI startups, and the UK has already started to see capital flow in the form of major tech investments from Microsoft and Salesforce's AI hubs, which have backed 17 unicorns and invested £1 billion ($1.3 billion) in UK tech.
London, where DeepMind is based, is one of the most attractive locations for talent, and some of the European universities where AI founders began their careers are incubators for the next generation of companies.
“We believe Europe will be one of the most important ecosystems for AI,” Seal said, adding that Index is “excited to double down” on its investments in the region.
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