As European startups continue to look for signs of sustained market confidence beyond the hype around AI companies, Atomico—one of the region’s more iconic and largest venture capital firms—has raised significant funds to indicate how the market is truly moving. The VC has closed new funds totaling $1.24 billion to back early- and growth-stage startups across the region. London-based Atomico describes this as its “largest ever fundraise,” though it technically spans across two pots of money. “Atomico Venture VI” stands at $485 million for mostly Series A-stage companies, with some reserved for seed-stage ventures. A separate $754 million fund, dubbed “Atomico Growth VI,” is targeted at Series B through pre-IPO stages.
Raising and allocating money from separate funds have become typical for many venture capital firms today. However, Atomico’s closure of two separate funds led by distinct teams is particularly noteworthy. Historically, the firm has focused on earlier funding rounds while participating in later stages when it made sense. Now, it aims to focus equally on the later stages of a startup's journey with a dedicated fund. This strategic move also addresses the trepidation among some in the investor community hesitant to invest in early-stage pre-profit companies. By setting things up this way, Atomico can attract contributions from more risk-averse limited partners (LPs) by enabling them to invest in more established businesses instead of a single fund spanning multiple stages.
This news arrives amidst a downturn in the global venture capital sphere, a trend Europe has not been immune to. Atomico has built a strong reputation for its annual research reports on the state of the European technology ecosystem, especially regarding the venture capital market. The firm’s most recent report painted a grim picture, noting that amidst an ongoing downturn, European startup funding halved in 2023. This decline was driven by factors such as geopolitical events, inflation, and interest rates. The report also determined that the market and investment data had been skewed by 2021 and 2022 due to a surge in demand for certain technologies during the Covid-19 pandemic. Despite this, European VC funding last year was slightly above pre-pandemic levels. Optimistically, this could suggest that the tech market may be on stronger footing than the darker data might imply. Q2 2024 data and new funds from several other prominent VC firms in the region could support this thesis.
In May, Accel announced a fresh $650 million tranche for early-stage startups, while more recently, Balderton unveiled $1.3 billion across two new funds—$615 million for early-stage ventures and $685 million for growth-stage investments. Founded in 2006 by Skype co-founder Niklas Zennström, Atomico initially launched with a $73 million fund and has since grown significantly. Through the years, the firm has launched progressively larger funds: $165 million for fund II in 2010, $476.6 million for fund III in 2013, $765 million for fund IV in 2017, and $820 million for fund V in 2020. The latest fundraise surpasses the previous one by over 50%.
Notably, Atomico’s sixth fund stands out because of its two distinct focus areas, something that may inadvertently reflect investor sentiment. According to filings with the Securities and Exchange Commission (SEC) last year, Atomico sought $600 million and $750 million for its venture and growth funds respectively. While it marginally surpassed its target on the growth side, it fell short of its venture target by nearly 20%. On the one hand, allocating more cash to later-stage companies is logical given that Atomico’s portfolio has matured, with former early-stage companies now requiring more significant support. On the other hand, the shortfall in the venture target indicates that fewer investors are willing to back fledgling companies than Atomico had anticipated.
Atomico has already made 21 investments across both funds, including several from Atomico Growth VI, such as DeepL and Pelago, as well as leading the Series B round for Corti. In the earlier-stage realm, Atomico Venture VI has invested in companies like Neko Health, Ben, Dexory, Deeploi, Strise, and Lakera, dating back to when the fund first opened in early 2022.
