Atomico, the London-based venture capital investor set-up by Skype co-founder Niklas Zennstrom, has raised $820 million for its fifth fund. Atomico V, whose $750 million capital target was oversubscribed, will invest in European start-ups that have the potential to catalyse ‘transformational change’, in society.
As well as co-founding Skype, Zennstrom, a 54-year-ol Swede, was also a co-founder of music-sharing service Kazaa. The company was originally a controversial peer-to-peer file sharing technology identified as bundling spyware with its core software. It had numerous legal issues with the music industry, eventually settling for $100 million before being sold on to Brilliant Digital Entertainment, who relaunched the brand as a monthly music subscription service. It was subsequently shut down.
But Zennstrom is well respected as an early investor in disruptive digital technologies. Skype has been his biggest success as a co-founder but he was also an early investor in Angry Birds creator Rovio Entertainment.
Atomico’s previous four technology funds have done well and have backed a total of 11 companies that have achieved valuations of above $1 million. Investments have included Viagogo, the ticketing site, Hailo, the taxi-hailing company, Farmdrop, an online grocer that allows users to order products directly from farmers, Stripe, an online payments-processing company, and Lendinvest, a property lending and investing platform.
The $820 million raised for the fifth fund brings Atomico’s total assets under management to $2.7 billion. That makes it one of Europe’s biggest technology funds. Investors include big tech names including Skype itself, Spotify, Zoopla and fintech Transferwise. Pension funds, insurance funds, sovereign wealth funds and family offices have also put money into Atomico’s funds. The previous, and fourth fund, raised $765 million in 2017.
The focus will again be on Europe-based start-ups that, much like Atomico investors such as Skype, Spotify and Transferwise, embody “visionary solutions to seemingly intractable problems”.
Mr Zennstrom commented:
“The priority for our fund is to support game-changing founders who want to build big companies with big missions — 2020 is a really pivotal moment because we are facing some of the biggest challenges in history.”
The European, and particularly the UK, tech start-up sector has been attracting growing levels of investment in recent years, even if there is still a long way to go to bridge the gap to the level of VC support U.S.-based peers benefit from. But an Atomico report published last year documented the rise of 99 VC-backed European tech companies to pass the $1 billion valuation level between 2015 and 2019. Over the previous 5 years there were only 22.
Investment in UK-based tech start-ups also doesn’t seem to have been derailed by Brexit, with the value of deals more than doubling from £4 billion billion in 2016 to a whopping £9 billion last year.
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