PYMNTS MonitorEdge May 2024

Index Ventures Raises $2 Billion Amid AI ‘Platform Shift’

Index Ventures has raised more than $2 billion for artificial intelligence (AI) projects.

The venture capital (VC) firm announced the fund Wednesday (July 10), saying it would divide the $2.3 billion it had raised into two funds: $800 million earmarked for early-stage startups and the remainder for latter-stage companies.

“It’s an incredibly exciting time to invest,” Jan Hammer, a partner at Index, told the Financial Times.

He added this is due to a technological “platform shift” from AI that Hammer likened to the advent of PCs, smartphones or cloud computing. “The last year or two has been characterized by AI everywhere.”

Marin Mignot, another Index partner, said more than half the firm’s recent investment money has been AI projects. It has backed Mistral — the most valuable AI startup in Europe — as well as Scale AI, which makes infrastructure for AI model companies, and DeepL, which provides AI writing and translation services for businesses.

Index has studied the impact of AI on fields ranging from accounting to molecular research to data center optimization, Mignot said.

“AI is a tide that changes a lot of sectors of the economy,” he told the FT.

Last week saw reports that AI had helped push venture funding in the U.S. to its highest quarterly total in two years.

At the same time an increasing number of tech companies have begun warning investors about risks related to AI.

As Bloomberg News reported last week, several tech giants have “quietly” issued AI-related warnings via the “risk factors” section of reports filed with the Securities and Exchange Commission (SEC).

For example, Meta has warned it could suffer backlash if its AI was used to spread misinformation during an election, and Microsoft has said it would face copyright infringement claims connected to its AI training and output. And Google has cautioned it will face financial damage if its AI tools were used to harm human rights or other social concerns.

Meanwhile, Federal Reserve Chair Jerome Powell said last week that his organization is investigating effects generative AI may have on productivity, inflation and the labor market.

It’s too soon to tell if the adoption of this technology will eliminate jobs, improve existing jobs or create new ones, Powell said.

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