Introduction Of Atomico
As European startups navigate the evolving landscape of venture capital, Atomico, one of the region’s most prominent VC firms, has raised $1.24 billion to fuel innovation across early- and growth-stage companies. This fundraising effort, split across two separate funds, underscores Atomico’s strategic approach to supporting startups through different stages of their development, amidst a challenging market environment.
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London-based Atomico, founded in 2006 by Skype co-founder Niklas Zennström, has long been a key player in the European venture capital scene. The firm’s latest fundraising effort is being hailed as its “largest ever,” with two distinct funds aimed at different stages of a startup’s journey.
The first fund, It Venture VI, stands at $485 million, primarily focusing on Series A companies, with some capital reserved for seed-stage investments. The second fund, It Growth VI, is valued at $754 million and targets later-stage companies from Series B through to pre-IPO.
A Strategic Shift in Focus
While It has historically leaned towards earlier-stage investments, this dual-fund strategy marks a significant shift. By establishing a dedicated growth fund, the firm is positioning itself to engage more actively with companies in later stages of development. This approach allows It to cater to the needs of its maturing portfolio companies, while also attracting more risk-averse limited partners (LPs) who prefer to invest in more established startups.
This strategy comes at a critical time for the global venture capital industry. The sector has been grappling with a downturn, driven by macroeconomic factors such as inflation, interest rates, and geopolitical tensions. Europe, too, has felt the impact, with startup funding halving in 2023 compared to the previous year. Despite this, It latest fundraising effort suggests that confidence in the European tech ecosystem remains strong.
Market Context and Atomico’s Role
It annual research reports on the European technology ecosystem provide valuable insights into the state of the venture capital market. Its most recent report highlighted the challenging environment for startups, with investment levels in 2023 falling back to pre-pandemic figures. However, some analysts interpret this as a sign that the tech market may be stabilizing after the exceptional highs of 2021 and 2022, fueled by the global pandemic.
It fundraising success is part of a broader trend among European VC firms. In recent months, several prominent firms have announced new funds. In May, Accel launched a $650 million fund for early-stage startups, while Balderton Capital raised $1.3 billion across two funds, targeting both early and growth stages. These developments suggest that despite the challenges, there is still considerable appetite for investing in European tech.
Challenges and Opportunities
While It latest fund surpasses its previous one by over 50%, the firm fell short of its initial target for early-stage investments. According to filings with the Securities and Exchange Commission (SEC), Atomico aimed to raise $600 million for its venture fund but secured only $485 million, reflecting a nearly 20% shortfall. This suggests that some investors are becoming more cautious about backing fledgling companies in the current market climate.
However, Atomico’s success in raising $754 million for its growth fund demonstrates the continued demand for investing in more mature startups. As the firm’s portfolio companies scale and require more capital, Atomico is well-positioned to support their growth.
To date, Atomico has already made 21 investments across both funds, including notable growth-stage investments in companies like DeepL and Pelago. On the early-stage front, Atomico Venture VI has backed startups such as Neko Health, Ben, and Dexory.
Conclusion
Atomico’s $1.24 billion dual-fundraise is a significant milestone for the European venture capital landscape. By focusing on both early- and growth-stage startups, Atomico is adapting to the evolving needs of the market and its portfolio companies. While challenges remain, particularly in attracting investment for early-stage ventures, Atomico’s continued success highlights the enduring appeal of European tech startups. As the market stabilizes, Atomico’s investments could serve as a bellwether for the broader health of the European startup ecosystem.
