European venture capital firm Atomico has raised $1.1 billion worth of new funding according to US regulatory filings – with $600 million earmarked for venture funding and a further $750 million for growth. It brings the company closer to its aim to raise $1.35 billion for both vehicles.
Atomico was founded in 2006 by Skype founder Niklas Zennström and has backed over 130 startups. Its investments include companies like Lilium, Klarna, Medwise, Hinge Health, and unicorn DeepL. Its exits include Truecaller, Lilium, and Clutter.
It recently co-led a €60 million funding round in healthtech startup Corti.
Venture capital funding has become harder
Venture capitalists have faced a challenging 18 months raising their own funds in response to the war in Ukraine, rising inflation, and more conservative LPs. In particular, newer VCs with first-time funds face higher hurdles for investable dollars.
Further, Q2 research by Pitchbook reveals startup exit values have declined, while asset prices remained depressed regardless of strategy.
In H1 2023 exit value amounted to €3.5 billion. This run rate implies that 2023 will mark a drop of 82.2 percent compared to 2022's total exit value. Similarly, exit count is pacing 10.4 percent below 2022. Public listings have had the biggest decline in exit count, falling 83.1 percent from 2022 to stand at just 11 exits.
Additionally, H1 2023 European IPO proceeds were down 27 percent raising only €3.8 billion vs 5.2 billion raised in H1 last year.
How the figures stack up to 2022
Last year European VCs raised €23 billion, a 13 percent increase from the €20 billion raised in 2021.
This year is so far, quieter. PitchBook's Q2 2023 European Venture Report revealed that H1 2023 saw 60 European vehicles raise €8.9 billion, including Highland Europe's new €1 billion fund in January.
This rate implies that the full year of 2023 is on track to pace 36.7 percent below 2022 levels if H2 shakes out similarly to H1.
A time for cautious optimism
But Atomico's funding suggests that we might be getting a positive end to the year. And we've still got a few months to go. Just take a look at some of the fundraising of September:
- Dawn Capital raised $700 million.
- Norwegian private equity firm Verdane closed its latest fund at €1.1 billion, nearly doubling its predecessor.
- Private Equity firm Keensight Capital raised €2.8 billion in an oversubscribed funding round.
It's unlikely we'll see a parity or surpass of 2023 fundraising. Still, against the backdrop of a demanding fundraising environment characterised by geopolitical tensions and economic uncertainties, there's more than a glimmer of optimism for the industry's future.
The final chapters of 2023 might hold positive surprises for the European venture capital scene.
Lead image: Niklas Zennström CEO of Atomico. Photo: Dan Taylor