The Ledger
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Stebbings: Andreessen Horowitz is Europe's biggest Series A threat
“When we sit and look at Series A, we don't sit and be frightened by Index or Excel or the big European players. We sit and be frightened of Andreessen coming into Europe. They're the ones who beat you.”
Mignot: Building venture-backed hyper-growth startups requires seven-day workweeks
“If you look at the most incredible companies in the past, you know, you look at Revolut, you look at Deliveroo, all of these companies, the amount of work that these founders and these early teams put in was tremendous. I mean, it was seven days a week, you kn…”
Shah: Pattern recognition and VC benchmarking are exercises in psychological safety
“There's so much long tail risk in a company that I feel like the exercise around pattern recognition benchmarking as just like two examples, risk mitigation as a third are exercises in psychological safety.”
Shah: Team quality is far more important than market in VC
“Like, there's this canonical question, I think, in our industry. Is it the market or is it the team, right? And I think many great firms would argue that it's market. In my view, it's very clearly the team.”
Danny Rimer: TAM and market size are noise in startup investing
“One of our tenants is definitely that market size TAM is noise.”
Danny Rimer: Index Ventures portfolio company Joost was a 'shit show'
“Being an investor in Juiced, which was a shit show”
Stebbings: Index dropped Town deal after portfolio company Instinct objected
“There was a conflict in venture that has now prevented a deal.
We've spoken about instinct being the AI assistant that's raised from index and benchmark.
Well, there's another AI assistant called town, which we just had on the show and index.
Were going to …”
Mignot: LLM investments will yield lower venture multiples but huge absolute returns
“The pure venture multiple will likely be lower than some of the other categories in the past. I think that is clear. The difference is that the size of the outcome and the speed of Very importantly, the speed at which the size is gonna get reached means that y…”
Mignot: Index Ventures never passes on early-stage deals over price
“We never lose a deal or pass on a deal because of price in the early stage.”
Mignot: Auto-investing in every pitch would have yielded better returns
“We ran the same analysis, where if you had said yes to every single company that had come to present at the partnership, we'd have done a lot better than we have. Simply because it goes back to the power law.”
Mignot: Systematic post-IPO selling beats market timing across VC portfolios
“If we looked at, if we had taken different schedules, we would have been worse off, and so we felt that overall, if you look across a basket, a portfolio, and again, it's a portfolio approach, so you may be wrong on one or two, but if you take a portfolio appr…”
Crespo: Pigment excluded Index Ventures to bring fresh perspectives
“All of the people at Index are my friends and they were already helping me. And in a way, I already knew the way they were thinking. And so for me, it was really important to bring new people, fresh ideas to the table.”
Shah: Index Ventures targets 5x upside on late-stage growth investments
“It's super dangerous. I think to say there's a safe two X, there's no such thing. And you alluded to this with the memory of all of the activity from 2021. There's no such thing as a safe two X. And so what we're looking for is definitely five X plus upside, e…”
Shah: Best ZIRP founders under-grew while VCs missed liquidity windows
“For founders, like the best founders probably didn't grow aggressively enough. For investors, investors probably didn't maximize liquidity opportunities.”
Shah: Follow-on rounds require rebuilding the investment case from scratch
“So I'm not thinking about averaging down my cost basis. I'm not thinking about incrementally increasing my ownership. I'm building a net new investment case on, can I create, you know, a fund returner? And with that, like I do all the work again. So if I think…”
Shah: VCs fail by picking wrong investments, not overpaying
“But when I think about conviction in people at the earliest stages I think you can be really elastic on price. At late stage, if you have conviction, price is just a representation of like future expected, expected free cashflow, right? So you're probably not …”
Shah: Total addressable market calculations are a trap for venture investors
“TAM is a trap. Like, go back and look at the S-ones of some of the biggest public companies today. Their market caps are bigger than what they thought the TAM would be.”
Danny Rimer: Future VC will split into aggregators and artisans
“I mean, of course, we're trying to wedge ourselves in between, right? That's the plan, but I agree with you. I think there will be asset aggregators and artisans, and what we're trying to be, what we talk about internally, is scaled artisans.”
Index Ventures' best investments have always been unanimous
“Our best decisions, our best investments have always been unanimous, which has a lot to do with the dynamic of the partnership being so varied and diverse in terms of who we are and how we approach things.”
Danny Rimer: VC signaling risk is largely a thing of the past
“I think there's so much money sloshing around and so many folks have so many different funds that signal risk is, is more of the past. I mean, if you look at the continuum of entrepreneurial power versus investor power over the last couple of decades, It's onl…”
Index Ventures will not significantly expand fund sizes over ten years
“First of all, that the partnership is not much bigger than it is today, that our funds are not much bigger than it is today, but that our returns have only gotten better”
Index Ventures avoided crypto because no partner found conviction
“We were trying to squint and figure out who was going to be the champion and was going to lead us to the promised land of being excited about crypto, and none of us could do it.”
Index limits lead partners to one vote on exit decisions
“I mean, in our winners, it's a question of, first of all, just being disciplined about when to exit, and making sure that we are not sort of falling into the trap of thinking that because they've been successful, they will naturally be more successful over tim…”
Goldberg: Founders should meet VC associates if they can lead rounds
“I strongly disagree with the notion that it's a waste of time for a founder to meet with a non-partner, though I do think the important question to ask an investor is, are you someone who can lead a round? So irrespective of title, and titles have become so me…”
Goldberg: Founder-led late-stage financing rounds like Front's Series C are aberrations
“At the same time, I think that's a bit of an aberration and many companies will decide to continue working with institutional leads where they get just a little bit more than you could handle from a single individual.”
Danny Rimer Cares Least About Valuation and Initial Market Size
“So if my partners were around the table, they'd probably tell you that I'm probably the partner who cares least about price, that if I think that the entrepreneur and the opportunity is large enough, I just want to be an investor in that company, and that I'm …”
Danny Rimer: Nasty Gal Could Have Succeeded With Co-Investor Board Support
“And I often think that what I should have done was share the workload with Someone else who's super competent and who would have been really helpful in the journey, because there were a lot of reasons why nasty gal could have been a phenomenal investment, but …”
Mignot: Early-stage VCs should never pass on startups due to high valuation
“We've seen millions of times, every time we've tried, we've walked out of something saying, oh, it's too expensive. It's great, but it's too expensive. I think you should never say that if you do early stage investing, because that, that's where, when you make…”
Escape the City Rejected Index Ventures to Raise on Crowdcube
“A company called Escape the City, you know, they had two term sheets from VCs, one of them index ventures on the table, and they turned them down and elected to use Crowdcube to raise the money that they were after, you know, that was back in 2012”
Green: Sequoia, Benchmark, and Index succeed because they excel at recruiting
“I truly think that's why Sequoia and Benchmark are great and Index are great because they help founders and entrepreneurs recruit amazing talent and people want to work for those funds portfolio companies.”
Mignot: Index Ventures bans 5 and 6 votes in deal approvals
“We vote one to 10. You can't vote five and six, so you have to be, you know, four against, and then it's kind of a, so it's a qualified majority, essentially, so if the average is above six, you know, the deal is approved”
Mignot: Index requires double-digit exit ownership for fund-returning deals
“For us, the goal is to get double digit ownership at exit. That is the, you know, that is typically where we, if we look at the performance of the fund, most of our returns have been generated by companies where we own close to or more than double digit owners…”
Martin Mignot: Index Ventures missed out on Qonto due to Revolut bias
“We could have invested in any, you know, in a lot of other neobanks you know, you think, I mean, Qonto would be a really good example of that. A lot of, you know, remittance and certain corridors, and so there's a lot of players.”
Mignot: Index sold Robinhood shares lower but retains a large stake
“We were a very large investor in in Robinhood and we sold you know we sold quite a bit at a lower price than where it is today. You know, we still have a large stake”
Mignot: Revolut operated as a negative gross margin business in early stages
“Especially in the early stages, it was kind of, You know, negative gross margin business. I mean, they were basically giving away effects that weren't charging for anything else. You had a little bit of interchange, but not that much.”
Mignot: Forbes Midas list measures performance from 10 years ago
“My view on the Midas list is, it's a really good list for who was a great investor 10 years ago, and so that, that's kind of how I would describe it, because if you look at a lot of these companies, there were deals that were made, you know, 10 years ago and s…”
Mignot: Index Ventures returned $30B and holds $20B+ across 30 years
“So we've been around for 30 years. We invested 11 and a half billion dollars. We've returned close to 30, and we still have 20 plus in holdings. Most of that is concentrated in eight, nine companies. We invested in probably 300, close to 400 companies over the…”
Mignot: Index Ventures avoids detailed number crunching for scenario planning
“We don't waste cycles, go incredibly detailed into those. Yeah, we do, we, I think we focus more on, you know, sensitivity analysis, so we focus on what are the few levers that really matter for this business, and where do we think they're gonna go, but, you k…”
Mignot: Index passed on Spotify multiple times due to music industry bias
“The example we always use at Index is, is Spotify. And to your point, it wasn't because of a bad investment, it was because of a mediocre investment, which is different. You know, we had just invested in Last.fm, which was a, you know, a totally reasonable out…”
Mignot: Jan Hammer is the strongest investment picker at Index Ventures
“I'd say Jan is probably the strongest. Yeah, I mean, if you look at his track record, you know, the consistency and some of the incredible winners that he has. I think he's a great picker.”
Mignot: Early-stage investors should ignore poor gross margins
“Beware of gross margin in the early days. That's a mistake we made a couple of times. You know, you have a lot of businesses that in the early days have really bad gross margin. All the LLM providers were very clear examples of that. I think if that's the only…”
Mignot: Index has backed companies at excessive valuations that caused harm
“Oh yeah, for sure. Definitely.”
Martin Mignot: Early Revolut success created bias against other fintech deals
“I was lucky enough to be early in Revolut, and, Then I looked at a lot of other fintech investments were like, well, Revolute can do this, so Revolute does it better”
Mignot: Seven partners generated Index Ventures' top eight fund returns
“It's a very equal partnership, and, you know, even in terms of performance, so I mentioned there's like eight companies that represent the, you know, the largest share of return, They've been there has been involvement from seven partners for these eight compa…”
Index Ventures Is the Largest Shareholder in Figma, Dream Games, and Wiz
“Largest shareholder in Figma, largest shareholder in Dream Games, largest shareholder in Wiz you know, second largest shareholder in Scale.ai, Revolut.”
$1B to $2B VC Funds Like Index Will Continue to Thrive
“I absolutely think they will continue to survive and thrive at that range.”
Goldberg: Investors should pay up for category winners over #2 or #3 players
“Yeah, so I think one of the lessons I learned from Index Ventures, and certainly two of my mentors, Mike Volpe, Ilya Fushman, was you want to be in the category winner, and when you need to pay up to be in a category winner, that's something that I think a lot…”