Despite the common perception that venture capital is concentrated in the Bay Area, with San Francisco being the top location for startups, Index Ventures is expanding its New York investment team. The firm plans to hire an additional New York-based investor and grow its team by three or four members over the next year, according to Index Ventures partner Shardul Shah, speaking to TechCrunch. This would represent significant growth for the 10-person team.
“For a venture fund, that’s hypergrowth,” Shah said, noting that Index Ventures is aiming to leverage the New York ecosystem and the energy of its team.
Shah highlighted the unique strengths of New York compared to San Francisco. While the Bay Area may have more engineering talent and venture capital, New York excels in customer density, particularly for companies in health and finance sectors. He emphasized that while early-stage startups benefit from having plenty of investors, a strong customer base is crucial for sustainable growth. The diversity of industries in New York is another advantage, Shah added.
New York is also a strategic location for firms with connections in both San Francisco and Europe. European companies expanding to the U.S. often choose New York as their initial base, providing an additional source of potential investment opportunities.
Index Ventures has already seen success in New York, with early investments in companies like Datadog, which went public in 2019 with a valuation of $7.8 billion, and Cockroach Labs, which reached a nearly $5 billion valuation in 2021.
Founded in Geneva in 1996, Index Ventures has expanded geographically roughly every 10 years. The firm opened its New York office in 2022, following a trend of Bay Area venture firms moving east. Lightspeed Venture Partners and Sequoia Capital both established New York offices around the same time.
New York is the second-largest venture capital hub in the U.S. In the first half of 2024, startups in the city raised $12.6 billion, a significant figure though smaller than the $40.4 billion raised in California. According to CB Insights, New York is home to 122 unicorns, second only to San Francisco’s 182.
However, New York’s venture ecosystem has seen fewer major exits, with Datadog’s 2019 IPO being a standout event. Index Ventures is ready to support further growth in the city.
Shah dismissed the idea that venture capital is exclusive to the West Coast, comparing it to outdated perceptions of Europe as stagnant. “To say that [venture capital] only happens on the West Coast is not accurate. It’s not even close,” he remarked.
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