London-based venture firm Atomico, known for its investments in fintech giants like Stripe and Klarna, has successfully raised $1.24 billion across two new funds. This move addresses the critical shortage of late-stage technology financing in Europe, according to Atomico CEO Niklas Zennström.
The new funding strategy includes Atomico’s first dedicated growth capital arm, aiming to close the funding gap between European and U.S. startups. Zennström highlighted that U.S. startups are 40% more likely to secure capital five years post-formation compared to their European counterparts, reflecting a significant disparity in funding opportunities.
The venture capital landscape has faced challenges recently, including declining valuations, high interest rates, and a slowdown in IPOs and acquisitions, leading to difficulties in raising funds. PitchBook reported that global venture capital fundraising is on track for its worst year since 2015.
Atomico’s new funds include $754 million earmarked for growth capital and $485 million for early-stage investments, exceeding the size of its previous fund from 2020 by 50%. Despite the tough fundraising environment, Atomico’s efforts mark a significant step in bolstering the European tech sector.
While Atomico has backed successful startups like Klarna and Stripe, it has also faced setbacks. For instance, shares of Lilium NV, an electric aircraft maker Atomico invested in, have plummeted over 90% since its 2022 IPO. Similarly, Graphcore, a chip designer Atomico supported, sold to SoftBank at a loss.
Zennström emphasized that despite the challenging exit landscape, the current environment presents an opportunity for companies to focus on sustainable growth. Atomico’s strategy diverges from other funds by investing in startups applying AI to specific problems rather than competing in the generative AI space. Notable investments include Germany’s DeepL, a $2 billion translation company, and Denmark’s Corti, which develops automation software for hospitals.
With these new funds, Atomico plans to continue supporting innovative companies in fintech, climate tech, and AI solutions.
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