Inside $17B Index Ventures: Anthropic, Wiz, Datadog & the Future of AI

Why Index Ventures backs founders before the market exists

Index Ventures has grown from three people to 93 and roughly $17bn under management, and its 2012 fund returned 11x. Shardul Shah, who arrived as an intern in 2004, says the method behind that is reading people rather than patterns, which is why he funded Wiz before there was a business plan or a market. As model capabilities reset every few months, that judgment matters more than any metric.

Takeaways

• Index backs people rather than founder patterns. Shah keeps no checklist of founder traits and listens for motivation and defining moments instead, wanting people who are creative and operationally detailed at once. Finding a connection with an entrepreneur is the hardest part of the work.
• Wiz was funded before a market existed. Shah committed on his birthday, before a business plan or any metrics, because he had spent years on the board of Adallom, the founders' earlier company. Index invested more than $250m in Wiz over time.
• AI durability keeps shifting under founders. O'Shea notes AI companies test heavily and retain little. Shah says durability keeps changing as new model capabilities arrive every few months, so Index backs adaptable founders. He told Karin at Cartesia to shut a successful line and she ignored him and was right.
• Shah ignores price and expects it to rise. He says he does not think much about valuations and argues more capital chasing relatively few outcomes will push prices higher. Index's sins of omission come from being queued on price, and he cites GitHub as one that got away.
• The sell decision belongs to the founder. Gilly Ronen, who joined Wiz's seed board alongside Shah, believes Wiz sold too early and Shah agrees. Most founders say they will never sell, and choosing between independence and an offer is the hardest call.
• Exit markets have reopened for private companies. IPOs cannot be timed, but M&A has accelerated, with public companies buying private ones and private-to-private mergers at various scales. Shah cites Wiz and Cursor, and expects fund cycles to return to normal.

How Index decides on a deal

1. A founder presents to the partnership for 30 to 45 minutes.
2. The partners then deliberate for the same length of time and decide.
3. A $1m cheque needs a quorum of about three partners.
4. An investment of $100m or more needs six or more.

Where the next AI bets are going

• Flapping Airplanes, which Shah calls the greatest army of 23 year olds and predicts will break world records given the technology and the industry interest behind it.