(Bloomberg) -- Atomico, a London-based venture firm that has backed fintech darlings Stripe Inc. and Klarna Bank AB, has raised $1.24 billion for two new funds.
The dual fund strategy, which includes its first dedicated arm for growth capital, is a response to a dearth of late-stage technology financing in Europe, Chief Executive Officer Niklas Zennström said in an interview. According to Atomico data, US startups are 40% more likely to raise capital five years after forming than European peers. “There’s a funding gap,” Zennström said.
Like startups, venture firms have been struggling to raise money. Falling valuations, high interest rates and a lack of initial public offerings and acquisitions in tech have kept major asset managers away from the sector’s deal-makers. In July, market research firm PitchBook estimated that venture capital firms across the globe were on pace for the worst year in fundraising since 2015.
Atomico, which formed in 2006 to focus on European tech, initially targeted $1.35 billion in total for the funds, according to regulatory filings. It ultimately brought in $754 million for growth deals and $485 million for early stage financing.
“This has been the toughest fundraising environment in a very, very long time,” Zennström said. “It’s a grind.”
Zennström highlighted that the new vehicles are 50% larger than Atomico’s most recent fund, its fifth, from 2020. The Financial Times previously reported on the firm’s efforts to meet its fundraising goal.
Atomico was an early backer of Klarna and Stripe, two fintech firms in line for potential major public listings.
But some recent exits from Atomico’s portfolio haven’t panned out well. Shares of electric aircraft maker Lilium NV have fallen more than 90% since it went public in 2022. Atomico owns 6.9% of the company. Graphcore, a British chips designer Atomico backed in 2017, sold to SoftBank in July for less money than it had raised, Bloomberg News reported earlier. Zennström, who sits on Lilium’s board, declined to speak about specific companies.
While exit opportunities have dried up, the current environment has provided “an opportunity for companies to shift gears to more sustainable growth,” Zennström said.
Unlike competing venture funds, Atomico hasn’t backed the highly valued startups trying to rival OpenAI in building generative AI models. Instead, Zennström said his firm has focused on startups applying AI for “specific solutions.” These include Germany’s DeepL, a translation provider now valued at $2 billion, and Denmark’s Corti, which makes automation software for hospitals.
With the new funds, Zennström said Atomico will remain focused on companies like these as well as those in fintech and climate tech.
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