This VC firm is striking gold, reaping $11 billion from Figma, other startups

Mint

2 days ago

Index Ventures, a venture firm with origins in Europe, is the envy of Silicon Valley.
A string of large startup exits could send more than $11 billion in proceeds to Index and its limited partners at a time when the venture market overall is still struggling to generate cash.
As the largest venture backer of software-maker Figma, Index has turned its $86.5 million investment in the company over the years into a stake worth nearly $6 billion, based on the most recently disclosed share volume and intraday Monday prices.
Figma's IPO last week stunned the market when its shares jumped 250% in the first day of trading. Index sold about 5% of its holdings at the IPO price of $33, generating about $108 million, and continues to retain a stake of greater than 15% in Figma post-IPO. The stock fell by about 20% on Monday but is still trading well above its listing price. Figma provides browser-based collaboration tools to help users design websites, mobile apps and social media posts.
Index also reaped a windfall from the recent investment by Meta Platforms into tech/ai/meta-in-talks-to-invest-14-billion-in-scale-ai-hire-ceo-alexandr-wang-5268564e">Scale AI, which paid out shareholders, and Google's pending acquisition of cybersecurity company Wiz.
Index, whose performance this year has been noteworthy among VC-watchers due to its smaller size compared with rivals, was among the earlier investors in each of these three companies, helping it to notch massive profits.
Index made more money than Sequoia Capital, widely considered the top venture firm in Silicon Valley, for both Figma and Wiz. Sequoia backed Figma at a later stage—its stake in the company is just over half the size of Index's ownership—and didn't invest in Scale. It was the first investor in Wiz, alongside Index and the Israeli firm Cyberstarts, but ended up with a smaller overall stake.
The number of rainmakers at a single firm is also notable, with each of the recent successes led by different Index partners.
'The performance they've delivered, and are delivering here in the future, is unbelievable," said Miles Dieffenbach, managing director of investments at Carnegie Mellon University, and a limited partner in Index funds, in a recent podcast interview. 'They could raise as much capital as they want to and they don't. They are the most performance-driven culture that we see."
When Meta acquired a 49% stake in Index portfolio company Scale AI in a bid to amp up its Superintelligence Labs unit, the firm received more than $1.4 billion, according to a person familiar with the situation.
Index also struck gold earlier this year when Alphabet's Google agreed to buy its portfolio company Wiz, an Israeli cybersecurity provider, for $32 billion, in one of the largest tech acquisitions in history. Index's stake in Wiz would be worth $4.3 billion should the Google deal finalize, The Wall Street Journal previously reported.
Founded in Switzerland in the 1990s, Index first expanded to London and then opened a San Francisco office in 2011. That's about the time when Index Partner Danny Rimer spotted Dylan Field, an energetic 18-year-old intern making a presentation for a startup in which Index had invested.
About a year later, Field and his co-founder and former computer science teaching assistant at Brown University, Evan Wallace, came to Index's office to pitch their new startup Figma. At that time they were the only employees at the company, recalls Terrence Rohan, who was an investor at Index at the time and joined Figma's board to represent the firm.
Impressed by the demo of their browser-based product-design tool, Index made an offer and eventually negotiated itself into a leading position for Figma's 2013 seed round with a $1.8 million check.
'It was a high conviction shot by Index," said Rohan, who is now managing director at seed venture firm Otherwise Fund. Some venture firms were making a multitude of small seed investments in companies without dedicating significant resources to the startups, he said. Index's strategy, by contrast, was to lead, join boards, and offer support, he said.
The Figma seed deal came out of Index's sixth fund, Rohan said. That fund also backed Robinhood, among others. 'It's done many, many turns," he said of the fund.
Index stuck with Figma through multiple rounds of funding. The company took years to release its product and suffered a setback after a proposed $20 billion acquisition by Adobe was called off due to regulatory concerns.
Index, meanwhile, was growing too but it avoided the kind of massive expansion that top venture firms like Sequoia and Andreessen Horowitz have pursued lately. Last year, Index raised $2.3 billion in capital for two funds, less than it collected for its prior set of funds in 2021.
'Not many outsiders can enter Silicon Valley and so quickly rise to prominence," said Hussein Kanji, founder of London-based Hoxton Ventures, who has co-invested with Index.