Atomico, one of Europe’s most prominent venture capital firms, has raised more money to make bets that may reveal market direction as European businesses go beyond AI company hype
The VC has raised $1.24 billion in new funds to support the region’s early- and growth-stage businesses.
Atomico, a London-based organization, is characterizing this as its “largest-ever fundraising event” despite being divided between two funds.
“Atomico Venture VI” is a $485 million fund that primarily invests in Series A-stage companies, with a portion of the funds designated for the venture. A separate $754 million fund, “Atomico Growth VI,” is dedicated to Series B through pre-IPO companies.
It is not uncommon for venture capital firms to raise and allocate funds from distinct funds; however, Atomico’s decision to close two different funds, each managed by a different team, is noteworthy.
Historically, the organization has prioritized earlier funding cycles, occasionally venturing into later stages when deemed appropriate.
It establishes a dedicated fund to concentrate equally on the latter phases of a startup’s journey.
This action may also indicate that certain members of the investor community are apprehensive about investing in pre-profit organizations that are still in the early stages of development.
Atomico can attract contributions from limited partners (LPs) who are more risk-averse by allowing them to invest in established businesses rather than supporting a single fund that may span from seed to Series F. This arrangement simplifies the process.
The announcement is also issued amid a global venture capital downturn, a trend that has not spared Europe.
Atomico has established a reputation for its annual research reports on the European technology ecosystem, which concentrates on the venture capital segment of the market.
Its most recent report was depressing, as it observed that European startup funding had decreased by half in 2023 amidst an ongoing depression.
Inflation, interest rates, and geopolitical events influenced this decline.
It also concluded that the global pandemic had distorted the market and investment data in 2021 and 2022.
Last year, European venture capital funding was marginally higher than before the pandemic. An optimist would interpret this as a sign that the tech market may be on a more solid foundation than the bleaker data would imply.
The thesis could be substantiated by the data from Q2 2024 and a significant number of new funds from several prominent VC firms in the region.
Accel announced a new $650 million fund for early-stage entrepreneurs in May. Balderton has recently unlocked $1.3 billion across two new funds: $615 million for early-stage and $685 million for growth-stage.
Falling Short
Atomico, established in 2006 by Niklas Zennström, a co-founder of Skype, initially launched with a $73 million fund.
Over the next two decades, the company introduced four additional funds: a $165 million fund II (2010), a $476.6 million fund III (2013), a $765 million fund IV (2017), and a $820 million fund V (2020).
Atomico’s most recent fund surpasses its predecessor by more than 50%.
Nevertheless, Atomico was pursuing $600 million and $750 million for its venture and growth funds, respectively, according to filings with the Securities and Exchange Commission (SEC) last year.
In summary, Atomico exceeded its growth target but achieved its venture target by nearly 20%.
Because Atomico’s portfolio of investments has expanded over time, it is more logical for the company to allocate additional capital to later-stage companies.
Companies previously in the early stages of development are now in the complete scale-up phase, necessitating an unprecedented amount of capital.
Conversely, Atomico’s failure to meet its funding objective for earlier-stage startups suggests that fewer investors are prepared to support emerging companies than Atomico had anticipated.
According to Atomico, it has already made 21 investments across both funds, including several from Atomico Growth VI into its portfolio, such as DeepL and Pelago. It is leading on the Series B round of Corti.
Atomico Venture VI has invested in Neko Health, Ben, Dexory, Deeploi, Strise, and Lakera in the earlier-stage domain since the fund’s inception in early 2022.