Dropbox Backer Index Is Raising Its Biggest Venture Fund

The firm has set a $500 million target for the new fund.

Index Ventures has put a $500 million target and $550 million hard cap on its latest fundraising, according to a person with knowledge of the plans. Fundraising is progressing quickly and a first close on the fund is expected on Jan. 27, said the person, who asked not to be named because the plans are private.

The venture fund, Index Ventures VIII LP, would be the firm’s biggest one to date. The Geneva- and San Francisco-based firm’s last venture vehicle secured 401 million euros ($435 million) in commitments and made its first investment in April 2014. That fund has a 28.1 percent net internal rate of return but has not yet exited any investments, the person said.

Index’s investments include speaker maker Sonos and online retailer Etsy. Cloud storage provider Dropbox, another Index-backed company, was valued at $10 billion last year, though investors such as Fidelity Investments and BlackRock wrote down the value of their stakes this year.

The general partners will contribute 30 percent of the new fund’s capital, the person said.  The fund will typically invest between $2 million and $20 million, but up to 8 percent of commitments could be invested in seed and startup technology sector opportunities. The firm may also establish a parallel co-investment fund of up to 10 percent of the size of the main fund, the person said. Index didn't respond to requests for comment.

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