As European startups proceed to look for signs of sustained market confidence past the hype round AI firms, Atomico — one of many area’s extra iconic, largest enterprise capital companies — has raised extra money to make investments which may point out how the market is basically shifting. 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 Enterprise VI” weighs in at $485 million for principally Sequence A-stage firms (with some reserved for seed), and a separate $754 million fund — dubbed “Atomico Development VI” — is for Sequence B via pre-IPO.
Elevating and allocating cash from separate funds is typical of many enterprise capital companies at the moment, 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 levels the place it made sense. Now it’s setting itself as much as focus simply as a lot on the later levels 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 firms. By setting issues up this manner, it turns into simpler for Atomico to convey contributions from extra risk-averse restricted companions (LPs) into the fray by enabling them to channel their money into tried and examined companies, quite than backing a single fund which will span something from seed to Sequence F.
The information additionally comes amidst a downturn in the global venture capital sphere, a pattern Europe has not been impervious to.
One of many 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 components similar 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) have been important outliers for revenues, funding and valuations resulting from a surge in demand for sure sorts of know-how, amongst different components.
European VC funding final 12 months was actually slightly 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 would possibly counsel. Q2 2024 data may support that thesis, as would a swathe of recent funds from a number of distinguished VC companies within the area. Again in Might, Accel announced a fresh $650 million tranche for early-stage startups, whereas extra not too long ago Balderton unlocked $1.3 billion across two new funds — $615 million for early-stage, and $685 million for growth-stage.
Falling brief
Based 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%. Nonetheless, Atomico’s sixth fund stands out given its two distinct areas of focus — one thing which will additionally inadvertently inform a narrative when it comes to the place traders’ heads are at, on condition that one of many funds failed to succeed in Atomico’s funding goal. Based on filings with the Securities and Trade Fee (SEC) final 12 months, Atomico was in search of $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 almost 20%.
On the one hand, it makes extra sense for Atomico to allocate extra cash to later stage firms on condition that its portfolio of investments has grown over time — what have been as soon as early-stage firms at the moment are in full scale-up mode, requiring extra money than ever. Alternatively, falling wanting its funding goal for earlier-stage startups is indicative that much less traders are keen to again fledgling firms than Atomico had hoped.
Atomico says that it has already made some 21 investments throughout each funds, together with a number of from Atomico Development VI into its portfolio including DeepL, and Pelago, in addition to main on the Sequence B spherical of Corti. Within the earlier-stage realm, Atomico Enterprise VI has plowed cash into Neko Health, Ben, Dexory, Deeploi, Strise, and Lakera, courting again to when the fund first opened in early 2022.
