As European startups proceed to search for indicators of sustained market confidence past the hype round AI corporations, Atomico — one of many area’s extra iconic, largest enterprise capital corporations — has raised extra money to make investments which may point out how the market is basically transferring. The VC has closed new funds totalling $1.24 billion to again early- and growth-stage startups throughout the area.
London-based Atomico is describing this as its “largest ever fundraise,” though technically it’s throughout two pots of cash. “Atomico Venture VI” weighs in at $485 million for principally Series A-stage corporations (with some reserved for seed), and a separate $754 million fund — dubbed “Atomico Growth VI” — is for Series B by pre-Stock Launch.
Raising and allocating cash from separate funds is typical of many enterprise capital corporations as we speak, however Atomico closed two separate funds, led by separate groups, is notable. The agency has traditionally leaned towards earlier funding rounds whereas dipping into later phases the place it made sense. Now it’s setting itself as much as focus simply as a lot on the later phases of a startup’s journey with a devoted fund.
This transfer may additionally level to a trepidation amongst some within the investor fraternity who’re hesitant to place cash into fledgling pre-profit corporations. By setting issues up this fashion, it turns into simpler for Atomico to carry contributions from extra risk-averse restricted companions (LPs) into the fray by enabling them to channel their money into tried and examined companies, fairly than backing a single fund that will span something from seed to Series F.
The information additionally comes amidst a downturn within the world enterprise capital sphere, a pattern Europe has not been impervious to.
One of the issues that Atomico has constructed a fame for within the funding world are its annual analysis studies on the state of the European know-how ecosystem, which focus particularly on how the enterprise capital finish of the market is faring. Its most up-to-date report made for grim studying, noting that admidst an ongoing downturn, European startup funding halved in 2023, pushed by elements corresponding to geopolitical occasions, inflation, and rates of interest. It additionally decided that the market, and funding information, had been skewed by 2021 and 2022, which (due to Covid-19) had been vital outliers for revenues, funding and valuations because of a surge in demand for sure sorts of know-how, amongst different elements.
European VC funding final 12 months was truly barely above pre-pandemic figures. An optimist would interpret that as an indication that the tech market could also be on higher footing than the darker information may counsel. Q2 2024 information may help that thesis, as would a swathe of recent funds from a number of outstanding VC corporations within the area. Back in May, Accel introduced a contemporary $650 million tranche for early-stage startups, whereas extra lately Balderton unlocked $1.3 billion throughout two new funds — $615 million for early-stage, and $685 million for growth-stage.
Falling brief
Founded in 2006 by Skype co-founder Niklas Zennström, Atomico launched initially with a $73 million fund, and within the close to two-decades because it launched a $165 million fund II (2010); $476.6 million fund III (2013); $765 million fund IV (2017); and $820 million fund V (2020).
Atomico’s newest fund surpasses the earlier by greater than 50%. However, Atomico’s sixth fund stands out given its two distinct areas of focus — one thing that will additionally inadvertently inform a narrative when it comes to the place buyers’ heads are at, provided that one of many funds failed to succeed in Atomico’s funding goal. According to filings with the Securities and Exchange Commission (SEC) final 12 months, Atomico was searching for $600 million and $750 million respectively for its enterprise and progress funds — because of this whereas it marginally surpassed its goal on the expansion facet, Atomico fell wanting its enterprise goal by practically 20%.
On the one hand, it makes extra sense for Atomico to allocate additional cash to later stage corporations provided that its portfolio of investments has grown over time — what had been as soon as early-stage corporations at the moment are in full scale-up mode, requiring extra money than ever. On the opposite hand, falling wanting its funding goal for earlier-stage startups is indicative that much less buyers are prepared to again fledgling corporations than Atomico had hoped.
Atomico says that it has already made some 21 investments throughout each funds, together with a number of from Atomico Growth VI into its portfolio together with DeepL, and Pelago, in addition to main on the Series B spherical of Corti. In the earlier-stage realm, Atomico Venture VI has plowed money into Neko Health, Ben, Dexory, Deeploi, Strise, and Lakera, courting again to when the fund first opened in early 2022.
