Index Ventures has raised more than 2 billion USD to capitalize on recent breakthroughs in artificial intelligence (AI). The venture capital firm believes that AI will ultimately transform the entire economy.

It is an incredibly exciting time for investments," said Jan Hammer, partner at Index. He spoke of a technological "platform shift" driven by AI, comparable to the introduction of PCs, smartphones, or cloud computing. "The last year or two have been marked by AI everywhere.

The 28-year-old company that supports start-ups like Revolut, Discord, and Figma has raised a total of $2.3 billion from institutional investors. Index, with offices in London, San Francisco, New York, Geneva, and Jersey, has allocated $800 million of this amount for early-stage start-ups and $1.5 billion for bigger bets on later-stage companies.

More than half of the recent investments have gone into the AI sector, said Martin Mignot, another partner at Index.

Index was an early investor in Mistral, Europe's most valuable AI startup, and Cohere, a Toronto-based startup developing AI models for businesses. The firm also supported Scale AI, which provides infrastructure for AI model companies and was recently valued at $14 billion.

AI influences many economic sectors," said Mignot, highlighting that Index has examined the impact of AI on areas such as accounting, molecular research, and data center optimization.

The AI investment boom of the past year has raised concerns about a potential bubble. David Cahn, a partner at Sequoia Capital, another Silicon Valley VC firm, recently warned in a blog post about a "speculative frenzy" around AI, noting that "many people lose a lot of money during speculative technology waves.

Mignot admitted that the hype had driven up valuations but argued that this should not be a cause for concern for venture capital investors. 'Venture capital is not a value play, quite the opposite,' he said. 'With the best companies, you always feel like you are overpaying. That is what makes you uncomfortable.'

Here is the translated heading in English:

"Index invested in Mistral for the first time a year ago, marking the largest seed round for a European start-up at the time, which valued the Paris-based company at 240 million euros. Since then, the valuation has risen to almost 6 billion euros.

Most of the billion-dollar investments in AI start-ups have come from the largest technology companies such as Microsoft, Amazon, and Google. This has enabled companies like OpenAI and Anthropic to gain an advantage in the development of advanced AI models.

There could be models that find themselves in specialized niches... but we don't see any new model companies competing on their own turf against the established players," said Hammer. "This is a pretty capital-intensive game.

However, venture capitalists with more limited resources still hope to compete and are betting that powerful AI models will create a platform for new applications, similar to the internet or smartphones.

‘There is still plenty of room for startups to build in areas that do not directly compete with Big Tech,’ said Mignot. ‘AI is just another platform to build on, but the last mile [the direct relationship with customers] will still be very important.’

The latest funding by Index is below the $3.1 billion raised in 2021 at the peak of the last technology cycle. This reflects a very different market for start-ups today, despite the enormous sums raised by some prominent AI companies.

We want to adjust the fund size to the opportunity set," said Mignot, as the round sizes in the growth phase have "significantly decreased" over the past three years.

Nevertheless, the fundraising is another sign of a partial thaw in the venture capital market after two years in which companies have postponed the search for fresh funds. Andreessen Horowitz closed a $7.2 billion fund in April, and General Catalyst is about to raise around $6 billion, according to people familiar with the matter.