How Index Ventures plans to take European startups global

Dan Burn-Forti

In 1993, Harvard undergraduate Danny Rimer was browsing a neighbourhood news stand when he came across a “weird magazine that looked like nothing else”. Rimer, an art lover, was immediately drawn to the graphic design. “It looked like the future,” he says.

The magazine was the first edition of WIRED, and this chance encounter in Cambridge, Massachusetts, led the then history student to make a decision that altered the course of his own life and, arguably, those of multiple entrepreneurs in the technology industry. Rimer had intended to return to his home town of Geneva, Switzerland, to work in the art world after university. Instead, he moved to the west coast. “I had to start working in this internet, digital revolution that was going on,” he says. “WIRED was more than a publication, it was representative of a movement for me.”

Today, Rimer is a Partner at Index Ventures, the venture capital firm founded by his brothers Neil and David and Giuseppe Zocco in Switzerland in 1996. Danny, the youngest of the three at 49, opened the company’s offices in both Europe and the US. Sitting in a small meeting room in Index’s London office in Mayfair, Rimer is thoughtful and affable; the room is furnished with mid-century office chairs in red leather and a wall of books, including not only the classic thought-leadership tomes beloved of entrepreneurs – building, scaling, leading – but also narrative non-fiction, biographies and art.

Based on criteria such as portfolio size and quality, investment activity and successful exits, the firm was ranked as the top VC firm in Europe by research company Dealroom in 2017. In 2019, a CB Insights/New York Times poll ranking individual VCs, placed Index in the top ten globally – alongside US juggernauts such as Sequoia, Benchmark and Andreessen Horowitz. Its investments span a wide variety of companies: enterprise and infrastructure giants such as Zendesk and MySQL, and consumer startups from Skype to Facebook, Slack to Deliveroo. Rimer has bounced between London and San Francisco – launching the Index office in the UK in 2002, and returning to San Francisco in 2011 to open the US office before returning to London in 2018.

In the Bay Area of the 90s, Rimer enjoyed a front row seat for web 1.0. Initially working at a startup, at the age of 23 he took a job at Hambrecht & Quist, a boutique investment bank that specialised in technology – which, at the time, was “less interesting [for investors] than oil and gas by factors of 10,” he says.

That was about to change: during his time there, Rimer worked on IPOs – including Amazon, Netscape and Verisign – and realised that he was much more interested in talking to the founders of the companies he was investing in than the organisations providing the capital. He decided to move to investment, joining VC company The Barksdale Group as a general partner in 1999.

At the time, the consumer internet was still nascent – there had been notable flameouts such as pets.com in the US and boo.com in the UK. This led Rimer to search out companies that could be pervasive and had products with low costs of adoption, “which led us to Skype pretty quickly”. Similarly, around the turn of the century, large enterprise companies were beginning to come under threat from open source software: Rimer invested in Swedish company MySQL in 2003. “You had the Skype folks coming out of Europe being really efficient, and you had the open source movement, which came out of Sweden,” he says. “That socialist sort of concept, the notion of giving software away and then hoping that you’re going to get paid, is not something that would have come out of the US.”

It was clear that there was something happening in Europe. And London – because of the language and because it had attracted other American VCs, including Benchmark and Accel – seemed to be the best place for Index to open an office. “There was more critical mass here than anywhere else in Europe,” Rimer says. “Most US VCs viewed Europe as a museum – less so today – and were really focused on China and India. We’ve always felt that we have to be outsiders but understand the local cultures, and be able to switch from being considered local to also having the distance to evaluate companies, so the US and Europe for us have been the core markets that we wanted to go after.”

Rimer sees today’s entrepreneurial landscape as much more global than in his initial stint in London, with less of a Silicon Valley skew. “The entrepreneurs are not particularly different in terms of their goal,” he says. “They’re different in terms of the way that they present themselves. The west coast folks tend to have the best polish, and you really have to take what they say and dial it down. In Europe it’s the opposite – when they say they’re quite good, they’re usually incredibly good. Those cultural differences haven’t changed.”

Rimer is bullish about Europe’s strength in areas such as fintech and mobility – the latter offering an interesting lesson in product-market fit: his LA-based scooter company Bird is most active in Europe, alongside US competitor Lime and European versions such as Voi, Wind and Dott. “The reality is that there are so many pockets of opportunity, you just have to be open to it, and be aware of it,” he says. “Adoption outside of the US has been an afterthought for most of these [US] companies.”

He cites the example of Dropbox, one of his former portfolio companies. In 2011, although the storage startup was based in the Bay Area, most of its users were in Europe – more than that, they were paying subscriptions rather than using the service for free. “I think the challenge for companies of having to cater to their customer – irrespective of where they are – has never been more critical than today,” Rimer says.

Every VC has different instincts and, maybe more importantly, biases when deciding which founders to back. Rimer admits to looking for “outliers, folks who have been placed on this planet for what they’re building, and they have absolutely nothing else they could do but this. I really veer towards the obsessive type of person who’s been noodling in their head about this business since they’ve been a teenager, and they’ll be happy doing this for the rest of their lives. Other than that, they don’t really know what to do with themselves.”

Founders certainly seem to appreciate Rimer’s approach, as José Neves, CEO of luxury startup Farfetch, attests. “Danny led our Series B and at that time we had other world-class VCs bidding, but Danny speaks to the entrepreneur with empathy, understands the journey and obviously has tremendous acumen and experience. So it wasn’t a hard decision at all.”

Venture capitalists tend to be remembered for their wins, not their losses. And Rimer currently has bets on companies such as Patreon, Etsy and Discord. But that doesn’t stop him from recalling some of the ones that got away, including Airbnb. (“We weren’t organised to win – that still hurts.”) Others were great ideas that somehow didn’t get traction and “you put good money after bad” (Nasty Gal). Perhaps the most frustrating are great ideas at the wrong time. Rimer invested in an on-demand delivery company, Webvan – which eventually went bust – during the dotcom bubble. Today, its facsimile PostMates is valued at in the region of $2.4 billion (£1.9bn).

For Rimer, the success of a venture largely depends on the founders finding a way, even if it means shifting the focus of the company. He cites the example of Stewart Butterfield pivoting from a gaming company to collaboration software when he founded Slack. Similarly Jason Citron, the founder of messaging application Discord, started out with a gaming startup; and Daishin Sugano and Eddy Lu started a competitor to OpenTable before switching to sneaker marketplace GOAT Group.

I ask what gets him out of bed in the morning. “Do I seem like I lack enthusiasm?” he laughs. “When a great entrepreneur’s business is on fire, it’s hard to think of a better job.”

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