As the European startup landscape continues to navigate the post-AI hype reality, Atomico, one of the region’s largest and most iconic venture capital firms, has announced a significant fundraise. The company has closed two separate funds, totaling $1.24 billion, to back early- and growth-stage startups across Europe. This is Atomico’s largest ever fundraise, with $485 million allocated for Series A-stage companies and $754 million dedicated to Series B through pre-IPO investments.
Atomico’s decision to split its fund into two separate pots is a significant move, as it signals a shift in the firm’s investment strategy. Historically, Atomico has focused on earlier funding rounds, but with its latest funds, the company is establishing a dedicated focus on later-stage investments. This move could be an indication that Atomico is responding to a growing trend among investors who are hesitant to back pre-profit companies.
The news comes amidst a global downturn in venture capital investments, with Europe not being immune to the trend. Atomico’s own research report on the European technology ecosystem noted a significant decline in startup funding in 2023, driven by factors such as geopolitical events, inflation, and interest rates. However, the report also highlighted that European VC funding was slightly above pre-pandemic figures, suggesting that the market may be on better footing than initially thought.
Other prominent VC firms in the region are also releasing new funds, which could potentially support this thesis. Accel announced a fresh $650 million fund for early-stage startups in May, while Balderton unlocked $1.3 billion across two new funds earlier this year.
Atomico’s decision to allocate more cash to later-stage companies makes sense, given the firm’s portfolio of investments has grown over time. Many of its early-stage companies are now in full-scale-up mode, requiring more funding to drive growth. However, falling short of its target for earlier-stage startups is an indication that fewer investors are willing to back fledgling companies.
Despite this, Atomico has already made 21 investments across both funds, including high-profile deals in companies such as DeepL, Pelago, and Corti. The firm’s focus on earlier-stage investments is evident, with cash allocated to startups such as Neko Health, Ben, Dexory, Deeploi, Strise, and Lakera.
With its new funds, Atomico is well-positioned to make a significant impact on the European startup ecosystem. As the company continues to invest in a range of sectors, it will be closely watched to see how its approach evolves in the face of a changing market.
