Investment outfit Atomico has closed Europe’s largest standalone tech venture fund claiming the situation in the EU has changed and its services are not needed as much.
For the last ten years the fund has provided $765 million to help tech companies start outside the US. The London-based venture firm was started by Skype co-founder Niklas Zennstrom.
It has invested in around 60 firms since it was established in 2006 and backed Supercell and Angry Birds maker Rovio Entertainment.
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.
Mattias Ljungman, an Atomico partner, said that thinks were changing in the region both in the maturity of entrepreneurs and business models. The outfit will still invest in Europe but will be interested in other regions now.
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.
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.
But others are now providing funds too. 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.
Maker of Angry Birds Rovio has secured $42 million to push forward into frontiers hitherto unknown to the company and its staff.
Rovio made a name for itself by developing Angry Birds, mobile game number one on smartphones, iPhones and tablets around the globe. According to Rovio, 40 million users play Angry Birds worldwide each month. In total, the game has been downloaded over 75 million times. Rovio cashes in on ads displayed in the free-to-play game.
Accel Partners and Atomico Partners had their hands in the funding round in a hope to grab a slice of a booming and potentially very lucrative market. Skype cofounder Niklas Zennström, who launched Atomico Partners after cashing in on the sale of Skype, will join Rovio’s board and pass on his arcane knowledge.
Rovio added that so far over two million Angry Bird cuddly toys have been sold to hapless punters, while 40 percent of iOS-based Angry Birdists have opted to buy extra, downloadable content.
Wired claims Rovio managed to rake in $50 million from diverse channels such as app sales, downloadable content and all other products sold to fill punter’s inner void for a quarter of an hour.
Steward Townsend of Oracle and Jon Bradford of The Difference Engine moderated a panel that wheeled in three guys to chat about the state of startups and the kind of investments they might get. Townsend is wearing an astonishing floral shirt. But he did use to work for Sun.
Sarik Weber of Hanse Ventures – a new company based in Germany – said it’s a good time to start companies. But many venture capitalists and incubators don’t understand search engine optimisation and don’t want to become part of the “ecosystem”. Incubators have to offer value to company founders because otherwise they can do it by themselves. You need angels that have experience in the industry. Hanse has founded five new companies and forged them into the kind of companies Hanse thinks they should be.
Hanse only takes half of the company they found and founders normally join up with no money. It’s a lot to do with gut feeling and analysis of the markets. The first goal is to make these companies profitable. Once a company is profitable Hanse has all of the options. Hanse has a team of 20 people including designers, admin people and search engine optimisation as part of the deal. These services are mainly free.
Mattias Ljungman from Atomico said his company dealt with the founders of Skype and had the idea of making a business that was more entrepreneur centric – much as happened in Silicon Valley. Atomico invested in both Europe and the US and co-invested with Sequoia, Mayfield, General Catalyst and others. He said he’d noticed there was a bit of a gap in the market because there weren’t many investors in the opening stages. Atomico raised $165 million in 2010 through institutional investors. Atomico has people based in Brazil, in China, in Europe and the US. There’s about 10 people involved but his company has to think globally.
Atomico focuses on the early stages, including seed investment and money up to four or five million dollars. Venture, said Ljungman, is about thinking really big. He said Atomico is not interested in companies that are going to make less than a billion dollars. Europe has been very successful in the last couple of years and there’s more activity even in a difficult market. “We have to think big,” he said. He looks at Europe as an emerging market. There’s a much broader spectrum of capital these days, including entrepreneur based investors.
Atomico has invested in 10 companies, and can go in at a couple of hundred thousand. It invests in companies with good teams, and strong products. The percentage of company Atomico takes is anywhere between 25 and 35 percent. The company has had one exit so far. The best way to start a business is to think about the next amount of money you want to raise. The company focuses on consumer businesses because those businesses move a lot quicker and you find out very soon whether a product or business is going to be successful.
Roberto Bonanzinga, of Balderton Capital said his company’s bread and butter is Europe, but has about 20 percent outside Europe, including China and the USA. His company likes to work with people who have spark. Most investments are first money, but does invest in more established businesses, including seed money. Balderton believes the spotlight should be on the entrepreneur, not on his own company.