Introduction

Atomico Investment Holdings Ltd, a European venture capital firm, has successfully raised $1.1 billion in new funding to invest in startups. This achievement is notable, considering the ongoing tech slowdown that has affected the broader industry. The London-based group has secured fresh funds through its new venture capital and growth funds, getting closer to reaching its $1.35 billion target for both vehicles.

The Current Funding Landscape

The recent capital infusion comes at a challenging time for venture capitalists (VCs), who have found it more difficult to raise funding due to higher interest rates and falling valuations in the technology sector. PitchBook’s research reveals that European venture capital funding for start-ups significantly slowed down in the first half of this year, with the total value of deals decreasing by over 60% compared to the same period last year.

In the second quarter, European VCs invested approximately $20 billion, experiencing a 40% year-on-year decrease. On the other hand, North American investments almost halved, dropping to $42 billion in the same period.

Atomico’s Success and Background

Atomico, founded in 2006 by Skype founder Niklas Zennström, has solidified its position as one of Europe’s most prolific technology investors. It has backed more than 130 start-ups to date, including notable companies such as Klarna, the buy-now-pay-later financial technology group, and Lilium, an electric flying car start-up. With $5 billion under management, Atomico previously raised $820 million for its fifth fund in 2020.

Niklas Zennström has expressed his belief in Europe’s potential for creating more innovative companies, emphasizing the need to break the Silicon Valley monopoly and build a similar or even better tech ecosystem in Europe. His vision aligns with Atomico’s mission to empower promising European start-ups.

Challenges Faced by Venture Capitalists

In the past 18 months, venture capitalists have encountered several challenges, including rising inflation and private market valuation adjustments. Start-ups like the Turkish delivery company Getir have witnessed significant reductions in their valuations due to challenging macroeconomic conditions.

Additionally, the scarcity of initial public offerings (IPOs) has hampered fundraising efforts for venture capitalists. IPOs serve as a crucial exit strategy for these managers and their institutional backers to generate returns on investments. However, recent choppy IPOs of major technology companies in the United States, such as Instacart, have dampened hopes of a recovery and led venture capitalists to advise start-ups to postpone their IPO plans until interest rates stabilize in the United States.

Other European Venture Capital Fundraising Achievements

Atomico’s new funding achievement places it among the largest hauls of its kind made in Europe this year. Notable recent achievements include Plateau Europe closing its new €1 billion fund in January and Dawn Capital, a London-based software investor, raising $700 million last month.

Summary

European venture capital firm Atomico has successfully raised $1.1 billion in new funding. Despite the challenges faced by the broader tech industry, Atomico’s achievement demonstrates the continued growth and potential in the European start-up ecosystem. This funding will enable Atomico to invest in promising companies and empower entrepreneurs to build innovative tech solutions. As venture capitalists navigate the uncertain landscape, it is important to adapt and find opportunities amidst changing market conditions.