When Neil Rimer co-founded Index Ventures in 1996, his ambition was to create one of the best venture capital firms in the world. Sixteen years on, it has a portfolio of more than 100 companies—many with well-known names. They include Skype, now part of Microsoft, Lovefilm, bought by Amazon in 2011, Net-a-Porter, the luxury fashion website now owned by Richemont, and MySQL, the world’s most popular open source database which was sold to Sun Microsystems in 2008. Many others are quoted on stock markets around the world, with the online gambling group Betfair and the internet clothing retailer ASOS listed in London and several companies on the US Nasdaq.
Today, Index Ventures manages more than €2 billion of funds and is ranked first decile in its category. With around 50 staff, it is just raising its sixth venture fund and last year raised a €500 million growth fund to finance later-stage activity which often requires larger sums of expansion capital to reach the next stage of growth. IndexVenture just announced a EUR 150 million life science fund in partnership with Glaxo Smithkline and Johnson & Johnson.
‘Doom for a business like ours would be to believe that we have arrived — we’ll never arrive,’ says Neil Rimer. ‘But we’re making progress on a path towards a distant objective. We’ve had successes like Skype and MySQL and are associated with companies such as Dropbox, Etsy and Criteo. Hopefully over time we’ll become associated with more and more companies like them, so that entrepreneurs will recognise a pattern and come to us with their businesses.’ Born in Montreal, Neil was educated in Switzerland when his father moved his bond-trading business to Geneva. After school, he went to Stanford University in California, at first studying biology and physics in preparation to be a doctor. But with the technology boom just beginning on Stanford’s doorstep in Silicon Valley, he decided he was more interested in technology and its use to solve problems. He switched to history and economics, and on graduation spent four years with Montgomery Securities in San Francisco, one of the ‘four horsemen’ in technology investment banking.
After a year obtaining an MBA from Harvard Business School, he decided to move back to Geneva with the intention of raising venture capital finance in Europe, a nascent market for the sector. He joined his father’s bond-trading business — called Index Securities — but after two years his father sold it and the two of them started Index Ventures in its wake. ‘At the beginning, we had no fund, so we raised money for each investment from institutional investors. We made two crucial decisions: that we would always rely on funding from institutional investors; and that we would specialise in technology and the life sciences.
‘For the first four years, we would identify an opportunity, structure the investment, raise the finance for it and then help build the company — either by sitting on the board or as an observer. We were and still are minority investors: our aim is to help entrepreneurs build their businesses.’ His younger brother David joined after a year, with the role of helping the firm to raise funds. David still manages all non-investment aspects of the firm. He had worked at Capital International, a big money management firm where he had been through the management training programme.
In 1996, the first non-family partner joined: Giuseppe Zocco, also a Stanford graduate who had worked for McKinsey with another of the Rimer brothers. ‘Very early on, we decided we didn’t want to be a family firm. We wanted to be the best venture capital firm in the world and the way to achieve that was to recruit the best people — and they wouldn’t all be Rimers. So we made Giuseppe an equal partner with a right of veto so that the family couldn’t gang up on him.’ In the same year, Index Ventures raised its first fund from a group of investors, including a Dutch pension fund. ‘We had $17 million to invest which we could deploy using our judgment without having to raise finance for each project. ‘Our first big success was Virata, a Cambridge University spin-off which made the chips needed for ADSL modems. These had yet to become the standard for internet connections, but Virata bet the company on the adoption of ADSL — which was exactly what happened. The company went public and was then acquired, making it a very successful investment for us.’
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