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 companies — has raised extra money to make investments that may point out how the market is absolutely 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 Enterprise VI” weighs in at $485 million for principally Sequence A-stage corporations (with some reserved for seed), and a separate $754 million fund — dubbed “Atomico Development VI” — is for Sequence B by way of pre-IPO.
Elevating and allocating cash from separate funds is typical of many enterprise capital companies at this time, however that 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 might 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 manner, 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, somewhat than backing a single fund that will span something from seed to Sequence F.
The information additionally comes amidst a downturn within the international enterprise capital sphere, a development to which Europe has not been impervious.
Among the many issues on which Atomico has constructed a status is its annual analysis studies on the state of the European know-how ecosystem, which deal with how the enterprise capital finish of the market is faring. Its most up-to-date report made for grim studying, noting that amid an ongoing downturn, European startup funding halved in 2023, pushed by elements akin to geopolitical occasions, inflation, and rates of interest. It additionally decided that the market, and funding information, had been skewed by 2021 and 2022 due to the worldwide pandemic
European VC funding final 12 months was really 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 recommend. Q2 2024 information might assist that thesis, as would a swathe of latest funds from a number of outstanding VC companies within the area. Again in Could, Accel introduced a recent $650 million fund for early-stage startups, whereas extra not too long ago Balderton unlocked $1.3 billion throughout two new funds — $615 million for early-stage, and $685 million for growth-stage.
Falling quick
Based in 2006 by Skype co-founder Niklas Zennström, Atomico launched initially with a $73 million fund, and within the close to twenty years 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 its final by greater than 50%. Nonetheless, in accordance with filings with the Securities and Alternate Fee (SEC) final 12 months, Atomico was looking for $600 million and $750 million respectively for its enterprise and progress funds. Briefly, whereas it surpassed its goal on the expansion aspect, Atomico fell in need of its enterprise goal by almost 20%.
On the one hand, it makes extra sense for Atomico to allocate extra cash to later stage corporations on condition that its portfolio of investments has grown over time. What had been as soon as early-stage corporations are actually in full scale-up mode, requiring extra money than ever. Alternatively, falling in need of its funding goal for earlier-stage startups is indicative that fewer 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 Development VI into its portfolio together with DeepL, and Pelago, in addition to main on the Sequence B spherical of Corti. Within the earlier-stage realm, Atomico Enterprise VI has plowed money into Neko Well being, Ben, Dexory, Deeploi, Strise, and Lakera, courting again to when the fund first opened in early 2022.