The $1.24 billion closing of two new funds by European venture capital firm Atomico represents a noteworthy fundraising milestone. This is Atomico’s biggest fundraising to date and signifies a tactical change in the company’s investment philosophy in the face of a difficult venture capital landscape.
The London-based company has divided its fresh money into two separate pots: $754 million for its “Atomico Growth VI,” which is targeted at Series B through pre-IPO investments. This bifurcation in funding, managed by different teams, highlights Atomico’s evolving strategy to cater to both early-stage and later-stage investment opportunities.
The decision to create separate funds for different stages of startup development comes as a response to the broader downturn in global venture capital, which has affected Europe as well. Atomico’s new funds are designed to address the varying risk profiles of investments, allowing for a more targeted approach in deploying capital. This structure is expected to attract a wider range of investors, including those who are more cautious about investing in earlier-stage, high-risk startups.
Atomico’s move reflects a growing trend among venture capital firms to adapt to the current market conditions. The firm has established a reputation for its annual reports on the European tech ecosystem, which have recently painted a sobering picture of the market. In 2023, European startup funding halved, influenced by geopolitical instability, inflation, and rising interest rates. Despite this, the overall funding levels were slightly above pre-pandemic figures, offering a glimmer of optimism for the tech sector.
The new funds from Atomico come as part of a broader trend in the European venture capital scene, where other prominent firms have also announced large fundraises. For instance, Accel recently raised $650 million for early-stage investments, and Balderton Capital secured $1.3 billion across two new funds.
Atomico’s latest fund surpasses its previous largest fund by more than 50%, indicating strong confidence in the firm’s ability to manage substantial investments. However, the firm fell short of its initial fundraising targets for the venture fund, which may signal a more cautious investor sentiment toward early-stage companies.
The firm has already begun deploying capital from its new funds, making investments in notable companies such as DeepL, Pelago, and Corti from the Growth VI fund. Meanwhile, Venture VI has invested in startups including Neko Health, Ben, and Deeploi.
As Atomico navigates the evolving landscape of venture capital, its strategic focus on both early and later-stage investments positions it as a key player in shaping the future of European tech startups.
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