Atomico, the venture capital firm founded by Skype co-founder Niklas Zennström, has announced the successful closure of two new funds totaling $1.24 billion, aimed at propelling the growth of European technology startups. This latest fundraising effort marks a significant boost for the European tech landscape, which has been grappling with reduced valuations and significant industry challenges.
Breaking Down Atomico’s New Funds
The newly raised capital is divided into two distinct funds: a $754 million growth-stage fund and a $485 million early-stage fund. The growth-stage fund will support startups moving from Series B rounds to pre-IPO financing, while the early-stage fund will focus on nurturing younger companies with promising potential.
This strategic expansion comes amid heightened speculation surrounding two of Atomico’s high-profile portfolio companies, Stripe and Klarna. Both companies have been the subject of intense market speculation regarding upcoming IPOs, signaling a potentially lucrative exit for investors.
European Tech Landscape: Current Challenges and Opportunities
The European tech sector has seen a dramatic shift in funding dynamics. Venture capital investment nearly halved in 2023, dropping to $45 billion from $82 billion in the previous year, according to Atomico’s report. This decline reflects a broader contraction in tech valuations and investment activity, a stark contrast to the pre-pandemic surge in valuations.
Despite these challenges, the total market value of private and public tech companies in Europe remained robust, exceeding $3 trillion in 2023. However, the sector experienced a significant loss of $400 billion in market capitalization in 2022.
Atomico’s Ambitious Growth
Atomico’s latest fundraising effort is notable for its scale, representing a more than 50% increase from the $820 million raised in its previous round (Fund V) in 2020. This substantial boost highlights the firm’s commitment to advancing European tech innovation despite current market headwinds.
Zennström emphasized the growing maturity of the European tech scene, stating, “European technology is coming of age. Meeting this opportunity requires ambition, hustle, and commitment from founders, who need investors with the experience and perspective to see beyond market cycles.”
Key Portfolio Companies: Stripe and Klarna
Stripe, valued at $70 billion in a secondary share sale, remains one of the most anticipated IPO candidates in the tech sector. Its robust position and ongoing growth make it a key player in the market.
Klarna, another prominent Atomico-backed company, is reportedly exploring a secondary share sale to provide liquidity for investors ahead of a potential IPO. Valued in the high-teen billions on the secondary market, Klarna’s move could signal a significant development for the European fintech landscape.
Looking Ahead: IPOs and Market Recovery
The European tech industry has faced a relative drought in major listings this year, with many investors looking to 2025 as a potential turning point. Successful IPOs would provide a critical opportunity for venture capital and private equity firms to realize gains on long-held investments.
Atomico’s new funds are expected to play a pivotal role in this recovery phase, providing essential resources to early and growth-stage companies aiming to scale and compete globally.
Conclusion
Atomico’s $1.24 billion fundraising represents a bold and optimistic step for the future of European technology startups. By supporting both early and growth-stage companies, the firm aims to foster innovation and drive the sector forward, even amidst current market uncertainties.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna Sahu holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.
