VC Firm Led by Skype Founder Raises $1.24 Billion to Invest in European Tech

Atomico, a leading European venture capital firm known for its early investments in high-profile companies such as Stripe and Klarna, has announced the launch of two significant new funds totaling $1.24 billion. These funds are aimed at supporting both early and growth-stage startups across Europe’s evolving technology sector. This announcement comes at a time when the European tech ecosystem has been struggling with declining valuations and reduced investment flows, making it a crucial development for the sector’s recovery and growth prospects.

Atomico’s new funding initiative is composed of two distinct funds: a $754 million growth-stage fund and a $485 million early-stage fund. The growth-stage fund is targeted at startups that are raising capital in their Series B stage or higher, including those approaching pre-IPO stages. This will provide much-needed capital for more mature companies looking to scale rapidly or enter public markets. Meanwhile, the early-stage fund focuses on startups that are just beginning their journey, providing them with the resources needed to grow, innovate, and navigate the highly competitive tech landscape.

The combined value of these funds, which totals $1.24 billion, represents a more than 50% increase from Atomico’s previous funding round, known as Fund V, which raised $820 million in 2020. This increase signals Atomico’s strong commitment to revitalizing Europe’s tech sector, even as the industry faces economic headwinds, including a significant downturn in venture funding.

The launch of these funds comes against the backdrop of a challenging period for the European technology industry. According to Atomico’s own reports, venture capital funding for European startups in 2023 saw a sharp decline, dropping nearly 50% to $45 billion from $82 billion in 2022. The downturn has been attributed to the cooling of tech valuations following a period of rapid growth during the pandemic, which had previously driven an unprecedented boom in tech investment.

In addition to falling venture funding, Europe’s tech market has faced significant market capitalization losses. In 2022 alone, $400 billion was wiped off the combined value of private and publicly listed tech companies, reducing the total value of the sector to just over $3 trillion. Despite these setbacks, Atomico remains optimistic about the future, as evidenced by its aggressive new funding strategy.

Founded in 2006 by Niklas Zennström, co-founder of Skype, Atomico has played an instrumental role in shaping Europe’s technology ecosystem. Over the years, the firm has invested in some of the most notable tech companies on the continent, including fintech giant Klarna and online payments company Stripe. These investments have cemented Atomico’s reputation as a key player in the European venture capital space.

Zennström expressed his confidence in Europe’s tech future, stating that the region is "coming of age" and is home to a wealth of promising startups. He emphasized that founders need investors with the experience and foresight to see beyond short-term market cycles and help them build globally competitive companies. The new funds, according to Zennström, will provide the necessary "firepower" to enable these startups to scale and reach their full potential.

Atomico’s announcement comes amid growing speculation about upcoming stock market listings for two of its flagship portfolio companies: Stripe and Klarna. Stripe, the payments processing company, was last valued at $70 billion in a secondary share sale, positioning it as a likely candidate for an initial public offering (IPO) in the near future. Meanwhile, Klarna, which specializes in buy-now-pay-later services, is reportedly in discussions with investors about a secondary share sale that could provide liquidity ahead of a potential IPO. According to reports, Klarna’s valuation in the open secondary market is in the high-teen billions, making it another strong contender for a public listing.

Exits through IPOs or acquisitions are a key component of the venture capital model, as they allow investors to cash out and realize profits on their equity investments, many of which are held for a decade or more. However, 2023 has been a notably slow year for European tech IPOs, with few high-profile listings taking place. Atomico and other investors are hopeful that 2025 will see a resurgence in IPO activity, providing them with opportunities to capitalize on long-held investments and further stimulate the market.

The launch of Atomico’s new funds signals a renewed sense of optimism and resilience in the European tech sector, despite the economic challenges that have plagued the industry in recent years. The significant size of the funds highlights Atomico’s belief in the continued potential of European startups to drive innovation and create value on a global scale.

Beyond providing much-needed capital, Atomico’s involvement is likely to have a broader impact on the European tech ecosystem. The firm’s deep expertise and network of connections will provide strategic guidance to its portfolio companies, helping them navigate complex market environments and seize new opportunities. By focusing on both early and growth-stage startups, Atomico is ensuring that Europe’s tech sector remains competitive at every stage of the company lifecycle.

The funds will also likely stimulate further innovation in key sectors such as fintech, artificial intelligence, and enterprise software, areas where Europe has already established itself as a global leader. Moreover, Atomico’s emphasis on sustainability and long-term value creation could encourage other venture capital firms to follow suit, fostering a more stable and growth-oriented investment climate in Europe.

Atomico’s new $1.24 billion in funding is a bold statement of confidence in the future of European technology. By offering financial support to both early and growth-stage companies, Atomico is positioning itself as a driving force in the next wave of European tech innovation. As the sector faces headwinds from reduced valuations and investment flows, this influx of capital could prove vital in helping startups weather the storm and emerge stronger on the other side.

With potential IPOs from major portfolio companies like Stripe and Klarna on the horizon, Atomico is well-positioned to continue its legacy as one of Europe’s most influential venture capital firms. The firm’s latest round of funding is not only a testament to its enduring belief in the potential of European tech but also a critical lifeline for startups navigating the challenges of today’s volatile market environment.