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 more cash to make investments that may point out how the market is de facto 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 Collection A-stage corporations (with some reserved for seed), and a separate $754 million fund — dubbed “Atomico Progress VI” — is for Collection B via pre-IPO.
Elevating and allocating cash from separate funds is typical of many enterprise capital companies right now, 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 manner, it turns into simpler for Atomico to deliver contributions from extra risk-averse restricted companions (LPs) into the fray by enabling them to channel their money into tried and examined companies, slightly than backing a single fund which will span something from seed to Collection F.
The information additionally comes amidst a downturn within the world enterprise capital sphere, a development Europe has not been impervious to.
One of many issues that Atomico has constructed a popularity for within the funding world are its annual analysis stories on the state of the European expertise 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 corresponding to geopolitical occasions, inflation, and rates of interest. It additionally decided that the market, and funding knowledge, had been skewed by 2021 and 2022, which (due to Covid-19) have been important outliers for revenues, funding and valuations because of a surge in demand for sure sorts of expertise, amongst different components.
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 knowledge may recommend. Q2 2024 knowledge may help that thesis, as would a swathe of recent funds from a number of outstanding VC companies within the area. Again in Could, Accel introduced a contemporary $650 million tranche for early-stage startups, whereas extra just lately 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 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%. Nevertheless, Atomico’s sixth fund stands out given its two distinct areas of focus — one thing which will additionally inadvertently inform a narrative by way of the place buyers’ heads are at, on condition that one of many funds failed to succeed in Atomico’s funding goal. In keeping with filings with the Securities and Change Fee (SEC) final 12 months, Atomico was in search of $600 million and $750 million respectively for its enterprise and progress funds — which means that whereas it marginally surpassed its goal on the expansion facet, Atomico fell in need of its enterprise goal by practically 20%.
On the one hand, it makes extra sense for Atomico to allocate additional cash to later stage corporations on condition that its portfolio of investments has grown over time — what have been as soon as early-stage corporations are actually in full scale-up mode, requiring more cash than ever. Then again, falling in need of its funding goal for earlier-stage startups is indicative that much less buyers are keen 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 Progress VI into its portfolio together with DeepL, and Pelago, in addition to main on the Collection 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.
