The VC behind Mistral, Revolut and Slack just raised $2.3 billion to invest in long-term AI champions: “The era of the quick-money mentality is over”

The VC behind Mistral, Revolut and Slack just raised .3 billion to invest in long-term AI champions: “The era of the quick-money mentality is over”
The VC behind Mistral, Revolut and Slack just raised .3 billion to invest in long-term AI champions: “The era of the quick-money mentality is over”

Index Ventures has worked with a long list of companies that have become pillars of the technology world. Think fintech giants Revolut and Wise, public transport app Citymapper and food delivery company Deliveroo.

Now the London-based venture capital fund has raised $2.3 billion from investors to capitalize on the recent surge in the number of AI companies in Europe and elsewhere, Index said Wednesday.

“We are just beginning to see where AI can make a difference,” said Hannah Seal, partner at Index Ventures, Assets Wednesday. “That’s why it’s so timely, because now we’re seeing that AI, especially at the application level, is slowly bearing fruit.”

Seal said she sees new opportunities in industries such as healthcare, hospitality and education, as well as historically “uninvestable” sectors that have opened up thanks to AI.

The venture capital firm, with offices in London, San Francisco and New York, will provide $800 million of the new capital for its venture capital funds and $1.5 billion for growth funds.

Index is no stranger to investing in AI companies. Last year, it was one of the backers of French startup Mistral in a $113 million funding round, pushing Mistral’s valuation to €240 million ($260 million). It is now Europe’s most valuable AI company at €6 billion ($6.5 billion). Scale AI and Wordsmith are also among Index’s other investments.

Of course, Index’s funds will not be dedicated solely to AI companies, although they will be a major focus.

The fresh capital comes just as the VC industry is beginning to see signs of recovery from the cash flow that dried up in recent years and is offsetting the investment frenzy in the technology industry during the pandemic. Andreessen Horowitz, a prominent Silicon Valley VC player, announced $7.2 billion in new funding earlier this year.

“The era of the quick-money mentality is over. The focus is now on building long-term sustainable companies,” Seal said.

The “first innings” of AI

The world of AI is evolving every day, but “we are still at the very beginning” of discovering the technology’s true capabilities in various industries, Seal said Assets.

“In the future, there will be very few companies that are AI native and not AI companies,” she said, citing mobile companies as an example, which feed into the broader technology ecosystem. “AI will permeate every company at some point in the future.”

While we are still scratching the surface when it comes to AI, Index is basing its bets on the founders at the top of the startups.

“When we back founders, we have to really believe that they’re in it for the long haul… (it’s their) life’s work to do this, solve this problem and build this company. And those people are few and far between,” Seal said.

It’s not about AI talent

While Europe has seen some notable players emerge in the wake of the recent generative AI boom, the country still has some catching up to do with the US, with fewer companies reaching the scale of OpenAI and Anthropic.

“I think Europe is catching up in the last decade of investing in technology startups,” said James Wise, partner at VC firm Balderton Capital at Assets‘s Brainstorm AI conference in April.

“So the company is still lagging significantly behind in certain areas. But when you look at the amounts of money being invested here at almost every stage, it is closing the gap with the American-based companies.”

But when it comes to keeping up with the fast-paced AI race, Europe and the UK have their strengths.

Europe has a robust ecosystem of early-stage AI startups, and the UK is already seeing initial inflows of capital in the form of major technology investments from Microsoft and Salesforce’s AI centers. Index has invested £1 billion ($1.3 billion) in UK technology as part of its backing of 17 unicorns.

London, home of DeepMind, is one of the most attractive locations for talent, and several European universities where AI founders began their careers are the breeding grounds for the next wave 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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