Atomico closes $765 million tech venture fund, Europe's biggest

[February 16, 2017]  By Eric Auchard

FRANKFURT (Reuters) - Atomico, which has spent the past decade proving startups can prosper outside Silicon Valley, said on Thursday it had closed Europe's largest standalone tech venture fund, a $765 million war chest that reflects the region's growing financing firepower.

The London-based venture firm started by Skype co-founder Niklas Zennstrom has invested in around 60 firms since it was established in 2006. It was an early backer of two of the world's hit mobile gaming companies - Supercell and Angry Birds maker Rovio Entertainment, both of Finland.

Such bigger venture funds promise to help fill a widely recognized funding gap that leads most European start-ups to be acquired rather than holding out for stock market flotations of their own in order to build powerful global tech franchises.

"We are seeing an inflection point for investment in the region, both in the maturity of entrepreneurs and business models," Mattias Ljungman, an Atomico partner, said in an interview with Reuters.

"We are focused on Europe, but will invest in other regions too," he said in reference to the United States and Asia.

Some of Atomico's recent investments included Scandit, a Zurich-based barcode-scanning software supplier, and Lilium Aviation, based near Munich, which is developing an electric jet with vertical takeoff capacity that could be used as a flying car.

Current investment themes for Atomico include potentially disruptive new firms in financial and property technology, online marketplaces as well as so-called deep tech areas, such as machine learning and artificial intelligence, Ljungman said.

The $765 million fund, Atomico's fourth, gives it the capacity to invest in early financing rounds while also allowing it to continue to join later rounds of financing for its most successful start-up bets.

Atomico CEO Niklas Zennstrom attends the eG8 forum in Paris May 25, 2011. The eG8 forum gathers "leaders of the Internet" to consider and discuss the future of the Internet and society. REUTERS/Gonzalo Fuentes

The new fund, which has been in the works for a year, is 60 percent larger than the previous investment pool set up in 2013.

Atomico is the latest in a succession of European-centered venture firms raising record amounts of venture capital. The trend reflects the growing size of individual funding rounds for the hottest start-up firms and the entry of new sources of capital from outside the world of start-up financing to compete for those deals.

Global VC firm Accel Partners last year raised a new $500 million European fund, while Index announced two joint U.S. and European funds - a $550 million fund for early-stage seed investments and a $700 million fund for later stage companies.

Previously, Balderton Capital raised $305 million in its latest European fund in 2014, while Lakestar raised a 350 million euro ($371 million) fund in 2015.

Rocket Internet last year announced a $1 billion Rocket Internet Co-Investment Fund in conjunction with a range of outside funders that is largely designed to take bigger stakes in its previous investments.

(Reporting by Eric Auchard, editing by G Crosse)

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