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Training AI models is expensive. OpenAI has told investors it expects to spend more than $7 billion on training models this year and nearly $17 billion in 2026.

Reflection has raised $130 million in venture capital from investors including Lightspeed Venture Partners, Sequoia Capital and CRV. The company was last valued at $545 million, according to PitchBook. The valuation it is discussing for its current round couldn’t be learned.

Index Ventures was among the first investors in startup hits Figma, Scale AI and Wiz

Index Ventures, a venture firm with origins in Europe, is the envy of Silicon Valley.

A string of large startup exits could send more than $11 billion in proceeds to Index and its limited partners at a time when the venture market overall is still struggling to generate cash.

As the largest venture backer of software-maker Figma FIG -27.38%decrease; red down pointing triangle, Index has turned its $86.5 million investment in the company over the years into a stake worth nearly $6 billion, based on the most recently disclosed share volume and intraday Monday prices.

Figma’s IPO last week stunned the market when its shares jumped 250% in the first day of trading. Index sold about 5% of its holdings at the IPO price of $33, generating about $108 million, and continues to retain a stake of greater than 15% in Figma post-IPO. The stock fell by about 20% on Monday but is still trading well above its listing price. Figma provides browser-based collaboration tools to help users design websites, mobile apps and social media posts.

Index also reaped a windfall from the recent investment by Meta Platforms into Scale AI, which paid out shareholders, and Google’s pending acquisition of cybersecurity company Wiz.

Index, whose performance this year has been noteworthy among VC-watchers due to its smaller size compared with rivals, was among the earlier investors in each of these three companies, helping it to notch massive profits.

Index made more money than Sequoia Capital, widely considered the top venture firm in Silicon Valley, for both Figma and Wiz. Sequoia backed Figma at a later stage—its stake in the company is just over half the size of Index’s ownership—and didn’t invest in Scale. It was the first investor in Wiz, alongside Index and the Israeli firm Cyberstarts, but ended up with a smaller overall stake.

The number of rainmakers at a single firm is also notable, with each of the recent successes led by different Index partners.

“The performance they’ve delivered, and are delivering here in the future, is unbelievable,” said Miles Dieffenbach, managing director of investments at Carnegie Mellon University, and a limited partner in Index funds, in a recent interview on the 20VC podcast. “They could raise as much capital as they want to and they don’t. They are the most performance-driven culture that we see.”

When Meta acquired a 49% stake in Index portfolio company Scale AI in a bid to amp up its Superintelligence Labs unit, the firm received more than $1.4 billion, according to a person familiar with the situation. Index also struck gold earlier this year when Alphabet’s Google agreed to buy its portfolio company Wiz, an Israeli cybersecurity provider, for $32 billion, in one of the largest tech acquisitions in history. Index’s stake in Wiz would be worth $4.3 billion should the Google deal finalize, The Wall Street Journal previously reported.

Founded in Switzerland in the 1990s, Index first expanded to London and then opened a San Francisco office in 2011. That’s about the time when Index Partner Danny Rimer spotted Dylan Field, an energetic 18-year-old intern making a presentation for a startup in which Index had invested.

About a year later, Field and his co-founder and former computer science teaching assistant at Brown University, Evan Wallace, came to Index’s office to pitch their new startup Figma. At that time they were the only employees at the company, recalls Terrence Rohan, who was an investor at Index at the time and joined Figma’s board to represent the firm.

Impressed by the demo of their browser-based product-design tool, Index made an offer and eventually negotiated itself into a leading position for Figma’s 2013 seed round with a $1.8 million check.

“It was a high conviction shot by Index,” said Rohan, who is now managing director at seed venture firm Otherwise Fund. Some venture firms were making a multitude of small seed investments in companies without dedicating significant resources to the startups, he said. Index’s strategy, by contrast, was to lead, join boards, and offer support, he said.

The Figma seed deal came out of Index’s sixth fund, Rohan said. That fund also backed Robinhood, among others. “It’s done many, many turns,” he said of the fund.

Index stuck with Figma through multiple rounds of funding. The company took years to release its product and suffered a setback after a proposed $20 billion acquisition by Adobe was called off due to regulatory concerns.

Index, meanwhile, was growing too but it avoided the kind of massive expansion that top venture firms like Sequoia and Andreessen Horowitz have pursued lately. Last year, Index raised $2.3 billion in capital for two funds, less than it collected for its prior set of funds in 2021.

“Not many outsiders can enter Silicon Valley and so quickly rise to prominence,” said Hussein Kanji, founder of London-based Hoxton Ventures, who has co-invested with Index.

Countries will be ‘unable to sustain growth’ unless companies start opening the taps

Weak business investment is threatening global growth, the OECD has warned, with corporate spending in most advanced economies failing to return to historic trends after the financial crisis and pandemic.

Net investment across the OECD nations has dropped from 2.5 per cent of GDP before the 2008 crisis to 1.6 per cent of GDP for the median country, with the pandemic delivering a further blow, according to the organisation’s figures.

If corporate spending on new projects and facilities does not pick up, countries will “not be able to sustain growth”, Álvaro Pereira, outgoing chief economist at the Paris-based organisation told the Financial Times.

Only two advanced economies out of 34 it tracked had surpassed their pre-financial crisis net investment trends as of last year — Israel and Portugal. Just six countries are above their pre-Covid investment trends, including Canada, Italy and Australia.

Average investment among the group is 20 per cent below levels that would have prevailed if pre-financial-crisis trends had continued, according to an OECD working paper. It remains 6.7 per cent below the pre-Covid trend.

Last week, the IMF upgraded its forecast for global growth amid signs that US President Donald Trump’s trade war will inflict less damage than initially feared.

However, its forecast of 3 per cent growth this year still marked a slowdown from 2024’s figure of 3.3 per cent and the 3.7 per cent average before the pandemic.

Multiple factors are playing a part in the phenomenon, but “pervasive” policy uncertainty is a key cause as businesses get buffeted by repeated shocks, warned Pereira, who was recently announced as the next governor of the Bank of Portugal.

Trump’s chaotic tariff rollout has added a fresh reason for corporations to hold back from big spending decisions, the OECD said, adding that business investment had fallen across all major industries.

“Uncertainty has been very pervasive since the financial crisis and we have had a lot of big crises,” Pereira said. “Sooner or later if we don’t have more investment you will not be able to sustain growth — it is absolutely vital.” 

A one standard deviation increase in economic policy uncertainty reduces business investment growth by a percentage point after a year, the OECD analysis found. 

This is because firms become more reluctant to splash out on long-term projects when they are unclear about the outlook for global demand, regulation or trade policy. 

While there has been strong growth in digital and knowledge-based investment, it has failed to offset the impact of higher depreciation and weak investment in physical assets, leading to ongoing declines in net business investment as a share of economies.

If current elevated levels of uncertainty prevail, real investment could be trimmed by 1.4 percentage points by the end of next year, the OECD added.

While the cost of capital fell after the financial crisis, the research found that firms are failing to undertake the “profitable marginal investments” that should be possible as a result, with companies in a number of countries boosting shareholder payouts compared with pre-crisis trends. 

The tension between shareholder returns and investment has been most acute in the UK’s troubled water sector. English water companies have paid out £83bn in dividends since privatisation 34 years ago, more than a third of the £230bn companies spent in the same three decades on infrastructure.

But the conflict has also been apparent in many other industries. Oil major BP has come under pressure from investors to make deep cuts to spending to protect shareholder payouts.

Australia picks Mitsubishi over German rival for $6.5bn defence deal

Boost for Japan as MHI named preferred bidder ahead of Thyssenkrupp<

Mitsubishi Heavy Industries has been selected as the preferred bidder to build a new fleet of Australian frigates, beating German rival Thyssenkrupp in a significant win for Japan’s defence industry. 

The order to build up to 11 frigates is worth as much as A$10bn ($6.5bn) in its first phase. It will be Japan’s first deal to export warships, some of which will be built in Australia with a partner.

A formal contract will be concluded in 2026, according to the Australian and Japanese governments.

The general purpose frigate order is part of a major overhaul of Australia’s defence capability against a backdrop of increased tension in the Indo-Pacific region. The overhaul includes the Aukus agreement with the US and UK to deliver nuclear-powered submarines to Australia as well as the construction of Hunter-class frigates in Adelaide.

Australia said last year that it had selected MHI and Thyssenkrupp as the two final bidders for the order, which was also contested by companies from South Korea and Spain.

Richard Marles, Australia’s defence minister and deputy prime minister, said MHI’s design was selected based on its ability to meet Australia’s needs and reflected the strength of the partnership with Japan.

“It’s a big moment in the relationship between Australia and Japan. We have a strong strategic alignment,” he said.

MHI will supply Australia with an upgraded model of its Mogami frigate. Japan’s largest defence contractor was considered the frontrunner in recent months despite concerns that its vessel was more expensive and that Japanese companies had no experience building warships in other countries. 

Pat Conroy, Australia’s minister for defence procurement, said MHI’s bid was “the clear winner” in terms of cost, capability and schedule with the first ship to be delivered by 2029. He said the Japanese proposal was cheaper over the life of the frigate contract as the Mogami design needed fewer crew onboard, was cheaper to arm and had a longer hull life. 

The first three ships will be built in Japan but eight will be constructed in Western Australia by Austal, an Australian company. Conroy said a company had been formed under Austal’s ownership to complete the work and that Australia’s government would have a “sovereign preference share”. 

The contest between the two frontrunners Japan and Germany had been pitched as a choice to deepen ties with Japan versus a more tried and tested route favoured by Australia’s navy, which has German-designed vessels in its fleet.

Japan has been a bit-part player in the global defence industry because of postwar constraints on arms exports, which were loosened in 2014.

The Mogami contract marks a turning point as a lack of commercial knowledge in forming defence contracts had hamstrung Japanese companies even after Tokyo pivoted to promoting arms exports.

Japan has sold radar equipment to the Philippines but the frigate contract from Australia is only its second deal to export fully assembled defence equipment and the largest ever secured by a Japanese group.

Yoshimasa Hayashi, chief cabinet secretary in Japan’s government, said the choice reflected “a high level of trust in Japan’s technological capabilities” and was “a significant step forward in elevating security co-operation with Australia, our special strategic partner”.

MHI’s shares rose 3.8 per cent on Tuesday to trade at a fresh all-time high.

Exporting arms systems is seen as critical for Japanese defence contractors to enlarge their customer base, expand capacity, develop technologies and bring costs down.

India’s Tata Motors bets big on Europe with $4.36bn Iveco purchase

Tata Motors bets big

In a major play to open up the European market, Tata Motors is acquiring the commercial vehicles business of Italy’s Industrial Vehicles corporation, popularly known as Iveco. 

The all-cash deal will cost the Indian automaker a whopping $4.36bn, significantly higher than the $2.3bn it paid in 2008 for its last big acquisition, Jaguar Land Rover. Tata Motors is using a bridge loan of $4.5bn, underwritten by Morgan Stanley and Mitsubishi UFG, and then plans to raise about $1.4bn in equity to repay part of it. The deal is conditional on Iveco’s separation of its defence business, which it is selling to Italian group Leonardo.

The massive amount of debt that Tata Motors is taking on has investors worried, and the stock has shed 6 per cent since the deal was announced. In a call with analysts, senior executives attempted to allay these fears, describing it as a meaningful, large acquisition in which both companies have agreed to build a business of “size and scale”. Tata estimates the deal will bring in more than $25bn in revenue from Europe, India and the Americas. 

Tata is making a bold move. While the commercial vehicle segment contributes 18 per cent of its revenues, sales volumes have been decreasing. For the immediate future, analysts worry that a slowdown in Europe and the US and Trump’s tariffs will hit revenues. Much as we might be tempted to analyse the deal based on the current business environment, it will take at least three or more years for the real impact of the deal to be clear. 

Because it is hoping to raise equity to pay for some of the debt, the immediate challenge for Tata Motors will be to convince the market that the deal really is good for the company. But the company has had . . . let’s call it, a “troubled history”, with its past acquisitions. JLR, for example, cannot really be described as a major win, with the brand dogged by a drop in global demand and continued pressure on its margins. In the recent call, Tata executives said they had learned from their past experience and that this opportunity was too good to pass up. The big question is whether the company has bitten off more than it can chew with Iveco.