- The Skype and Dropbox backer will rev up investment in 2016
- Time may be right for deal-making as public markets correct
Index Ventures, known for funding startups like Skype and Dropbox, has raised a fresh $550 million fund and expects to accelerate its deal making in 2016.
The venture firm, armed with as much as $1.25 billion after having spent little of the $700 million it raised last April, refrained from jumping into many late-stage deals last year in part because it felt valuations were too high. With private tech valuations expected to come down, the time may be ripe for deal-making in 2016, Index Ventures Partner Mike Volpi said.
“When it settles out, you’ll see a rise in activity because many of us still have a lot of dry powder,” he said.
The venture capital firm has added three new partners to direct the fund’s investments. It promoted longtime principal Shardul Shah, added Dropbox’s former head of product, Ilya Fushman, and brought on former Twitter CEO Dick Costolo. Costolo will spend half his time building his new fitness startup, and the other half as an Index partner. “Being able to do both is great,” he said.
Costolo will coach companies Index backs, focusing particularly on those located outside Silicon Valley. Certain Valley norms, like accepting equity in a startup instead of a higher salary, aren’t widely practiced in other parts of the world and makes finding and retaining talent difficult for those startups, he said.
Although he’s open to evaluating a range of technologies, Costolo said communication was particularly interesting.
“I’m surprised there hasn’t been more innovation around group messaging,” Costolo said. “Snapchat was the last” innovator.
Index will remain focused on enterprise, storage, financial services and gaming, and continue to invest across all stages of a company, Volpi said.
The firm, founded in Geneva, Switzerland 20 years ago, is atypical of venture capital firms. It opened its San Francisco office five years ago, and U.S. deal flow now represents about half of the firm’s portfolio. While the majority of the world’s venture capital originates from firms based in Silicon Valley, some later open offices in startup hotbeds across Asia, Europe and India.
Despite a dip in venture fundraising -- firms raised less money and closed fewer funds last year than they did in 2014 -- Volpi said the process remained smooth for his firm. He declined to name Index’s investors other than to say they have remained consistent throughout its history.
Index had eight of its companies go public within the past 12 months and now counts 160 active companies in its portfolio.