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Main article: Atomico

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Topics from 1 to 10 | in all: 31

Atomico raises new $820M fund to back ‘mission-driven’ European founders at Series A and beyond

09:00 | 18 February

Atomico, the European venture capital firm founded by Skype’s Niklas Zennström, has announced that it has closed its fifth fund — “Atomico V” — giving it another $820 million to invest in European startups.

The London-headquartered VC firm’s previous fund closed at $765 million, so this is an increase over three years ago. However, the remit remains largely the same, as Atomico says it plans to double down on its strategy of backing “mission-driven” European founders at Series A, but with the ability to also invest at Series B and C into what it calls “breakout” companies.

The new fund brings to a hefty $2.7 billion the total assets that Atomico has under management. Investors are said to include various institutional investors, such as pension funds, fund-of-funds, sovereign wealth funds, insurance companies, endowments, banks, family offices and government-backed entities from across the world.

A number of individual LPs have backed Atomico V, too, including what are described as founders and early team members from some of Europe’s most successful startups over the last 10 years, including Adyen, Klarna, TransferWise, Spotify, Supercell, Skype and Zoopla.

Founders delivering “positive, transformational change”

Atomico’s Zennström has long argued that entrepreneurs, not politicians, are the new “changemakers” because of the way technology is reshaping society and the economy. Inherent in this world view is that technology and entrepreneurship can and should be a force for good and that venture capital (and Atomico, specifically) has a “critical part to play in a world with so many urgent challenges” — from sustainability, fixing education, to better healthcare. However, unlike a pure Silicon Valley perspective, Zennström doesn’t believe that “for good” is inevitable and will require formal checks and balances to be put in place (see the firm’s “Conscious Scaling” programme).

To that end, Atomico says that fund V will allow it to continue to partner with “ambitious European founders, who deliver positive, transformational change across every aspect of society and the economy,” with the aim of building category-winning and sector-defining companies. “We’re guided by a simple belief: profit and purpose are mutually reinforcing, not mutually exclusive,” says Zennström in a statement.

Meanwhile, Atomico has already made several investments out of fund V. They include urban farming company Infarm; medical AI company HealX; AI-assisted design and construction simulation company Spacemaker; machine learning-based medical imaging company Kheiron Medical, employee retention company Peakon; digital procurement platform Scoutbee, childcare platform Koru Kids; sales team automation software Automation Hero; and doctor messaging service AccuRx.

Personnel changes

The formal closing of Atomico’s fifth fund marks a new era for the VC, which has seen a freshening up of its 60-person investor and operational team over the last three years.

Just last month, Irina Haivas, Atomico’s surgeon-turned-VC, was promoted to partner. In March 2019, three new (non-investment) partners were added to the list: Bryce Keane (comms), Alison Smith (chief of staff) and Camilla Richards (investor relations). The previous year saw Sophia Bendz, the former Spotify global director of Marketing, promoted to partner. And in September 2017, Tom Wehmeier, the firm’s head of Research, also made partner.

There have been departures, too. Most recently, long-time partner Mattias Ljungman left to raise his own seed fund. Before that, Carolina Brochado jumped ship to join SoftBank’s Vision Fund in London, and Teddie Wardi left for America to join Insight.

 


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Deep tech VCs on what they view as some of the most impactful young startups right now

08:58 | 18 January

During this week’s Democratic debate, there was a lot of talk, unsurprisingly, about ensuring the future of this country’s children and grandchildren. Climate change was of particular interest to billionaire Tom Steyer, who said repeatedly that addressing it would be his top priority were he elected U.S. president.

As it happens, earlier the same day, we’d spent time on the phone with two venture capitalists who think of almost nothing else every day. The reason: they both invest in so-called deep tech, and they meet routinely with startups whose central focus is on making the world habitable for generations of people to come — as well as trying to produce outsize financial returns, of course.

The two VCs with whom we talked know each other well. Siraj Khaliq is a partner at the global venture firm Atomico, where he tries to find world-changing startups that are enabled by machine learning, AI, and computer vision. He has strong experience in the area, having cofounded The Climate Corporation back in 2006, a company that helps farmers optimize crop yield and that was acquired by Monsanto in 2013 for roughly $1 billion.

Seth Bannon is meanwhile a founding partner of Fifty Years, a nearly five-year-old, San Francisco-based seed-stage fund whose stated ambition is backing founders who want to solve the world’s biggest problems. The investors’ interests overlap so much that Khaliq is also one of Fifty Years’s investors.

From both, we wanted to know which companies or trends are capturing their imagination and, in some cases, their investment dollars. Following are excerpts from our extended conversation earlier this week. (We thought it was interesting; hopefully you will, too.)

TC: Seth, how would you describe what you’re looking to fund at your firm?

SB: There’s a Winston Churchill essay [penned nearly 100 years ago] called “Fifty Years Hence” that describes what we do. He predicts genomic engineering, synthetic biology, growing meat without animals, nuclear power, satellite telephony.  Churchill also notes that because tech changes so quickly that it’s important that technologists take a principled approach to their work. [Inspired by him] we’re backing founders who can make a ton of money while doing good and focusing on health, disease, the climate crisis . . .

TC: What does that mean exactly? Are you investing in software?

SB: We’re not so enthusiastic about pure software because it’s been so abstracted away that it’s become a commodity. High school students can now build an app, which is great, but it also means that competitive pressures are very high. There are a thousand funds focused on software seed investing. Fortunately, you can now launch a synthetic biology startup with seed funding, and that wasn’t possible 10 years ago. There are a lot of infrastructural advancements happening that makes [deep tech investing even with smaller checks] interesting.

TC: Siraj, you also invest exclusively on frontier, or deep tech, at Atomico . What’s your approach to funding startups?

SK: We do Series A [deals] onward and don’t do seed stage. We primarily focus on Europe. But there’s lot of common thinking between us and Seth. As a fund, we’re looking for big problems that change the world, sometimes at companies that won’t necessarily be big in five years but if you look out 10 years could be necessary for humanity. So we’re trying to anticipate all of these big trends and focus on three or four theses a year and talk as much as we can with academics and other experts to understand what’s going on. Founders then know we have an informed view.

Last year, we focused on synthetic biology, which is a becoming so broad a category that it’s time to start subdividing it. We were also doing AI-based drug discovery and quantum computing and we started to spend some time on energy as well. We also [continued an earlier focus on ] the future of manufacturing and industry. We see a number of trends that make [the latter] attractive, especially in Europe where manufacturing hasn’t yet been digitized.

TC: Seth, you mentioned synthetic biology infrastructure. Can you elaborate on what you’re seeing that’s interesting on this front?

SB: You’ve maybe heard of directed evolution, technology that allows biologists to use the power of evolution to get microbes or other biological machines to do what they want them to do that would have been impossible before. [Editor’s note: here, Bannon talked a bit about Frances Arnold, the Nobel Prize-winning chemist who was awarded the prize in 2018 for developing the technique.]

So we’re excited to back [related] startups. One, Solugen, enzymatically makes industrial chemicals [by combining genetically modified enzymes with organic compounds, like plant sugars]. Hydrogen peroxide is $6 billion dollar industry, and it’s currently made through a petroleum-based process in seven-football-field-long production plants that sometimes explode and kill people.

TC: Is this then akin to Zymergen, which develops molecules in order to create unique specialty materials?

SB: Zymergen mainly works as a kind of consultant to help companies engineer strains that they want. Solugen is a vertically integrated chemicals company, so it [creates its formulations], then sells directly into industry.

TC: How does this relate to new architectures?

SB: The way to think about it is that there’s a bunch of application-level companies, but as synthetic biology companies start to take off, there’s a bunch of emerging infrastructure layer companies. One of these is Ansa Biotechnologies, which has a fully enzymatic process or writing DNA. Like Twist, which went public, they make DNA using a chemical process [to sell to clients in the biotechnology industry. [Editor’s note: More on the competition in this emerging space here.]

Also, if you look at plant-based alternatives to meat, they’re more sustainable but also far more expensive than traditional beef. Why is that? Well plant-based chicken is more expensive because the processing infrastructure being used is more than 10 years behind real chicken processing, where you’ll see robot arms that cut up chicken so efficiently that it looks like a Tesla factory. [Alternative meat] companies are basically using these extruders built in the ’70s because the industry has been so small, and that’s because there’s been a lot of skepticism from the investment community in these companies. Or there was. The performance of Beyond Meat’s IPO ended it. Now there’s a rush of founders and dollars into that space, and whenever you have a space where the core infrastructure has been neglected, there’s opportunity. A former mechanical engineer with Boeing has started a company, Rebellyous Foods, to basically build the AWS for the plant-based food industry, for example. She’s using [the machines she’s building] to sell plant-based chicken nuggets [but that’s the longer-term plan].

TC: Siraj, You say last year you started to spend time on energy. What’s interesting to you as it relates to energy?

SK: There’s been some improvement in how we capture emissions, but [carbon emissions] are still very deleterious to our health and the planet’s health, and there are a few areas to think about [to address the problem]. Helping people measure and control their consumption is one approach, but also we think about how to produce new energy, which is a shift we [meaning mankind] need to undertake. The challenge [in making that shift] is often [capital expenditures]. It’s hard for venture investors to back companies that are [building nuclear reactors], which makes government grants the best choice for early innovation oftentimes. There is one company, Seaborg, that has figured out a clever reactor. It’s not a portfolio company but it’s [compelling].

SB: We also really like what Seaborg is doing. These [fourth generation] nuclear companies have a whole host of approaches that allow for smaller, safer reactors that you wouldn’t mind having in your backyard. But Siraj put his finger on it: as an early-stage deep tech investor, we have to consider the capital plan of a company, and if it needs to raise billions of dollars, early investors will get really diluted, so early-stage venture just isn’t the best fit.

TC: There are areas you like, though, because costs have fallen so much.

SB: Yes. Satellite telephony used to be one of those areas. Some of the satellites in space right now cost $350 million [to launch] and took three to four years to build, which would be really hard for any early-stage investor to fund, But now, a new generation of companies is building satellites for one-tenth of the cost in months, not years. That’s a game changer. They can iterate faster. They can build a better product. They don’t have to raise equity to build and launch either; they can raise from a debt financier, [from whom they can] borrow money and pay it back over time. That model isn’t available to a company like Uber or Lyft, because those companies can’t say, ‘X is going to cost us Y dollars and it will pay back Z over time.’

TC: What of concerns that all these cheap satellites are going to clog up the sky pretty quickly?

SB: It’s a real concern. Most [of today’s satellites] are low earth satellites, and the closer to the earth they are, the brighter they are; they reflect the sun more, the more satellites we’re seeing instead of stars. I do think it’s incumbent on all of these companies to think about how they are contributing to the future of humanity. But [when you can transmit more information from satellites], the stability of governments improves, too, so maybe the developed world needs to sacrifice a bit. I think that’s a reasonable tradeoff. If on the other hand, we’re putting up satellites to help people buy more crap . . .

TC: It’s like the argument for self-driving cars in a way. Life becomes more efficient, but they’ll require far more energy generation, for example. There are always second-order consequences.

SK: But think of how many how many people are killed in driving accidents, versus terrorist attacks. Humans have many great qualities, but being able to drive a lethal machine consistently isn’t one of them. So when we take that into perspective, it’s really important that we build autonomous vehicles. You [voice] a legitimate concern and often when there are step changes, there are discontinuities along the way that lead to side effects that aren’t great. That comes down to several things. FIrst, infastructure will have to keep up. We’ll also have to create regulations that don’t lead to the worst outcomes. One our investments, Lilium in Munich, has built an entirely electric air taxi service that’s built on vertical takeoff. It’s nimble. It’s quiet enough to operate in city environments.

On roads, cars are constrained by 2D terrain and buildings, but [in the air] if you can do dynamic air traffic control, it opens up far much efficient transport. If you can get from downtown London to Heathrow [airport] in five minutes versus 50 minutes in a Tesla, that’s far more energy efficient.

 


0

Atomico VCs say that ‘everybody cares’ in Europe about where the startup dollars are coming from

01:23 | 12 December

Today at TechCrunch Berlin, four of Atomico’s most senior partners took the stage together for the first time, flying into the city from London, Stockholm and Geneva to talk about a wide range of issues. Among the many things we discussed with the four — including Sophia Bendz, Siraj Khaliq, Niall Wass and Hiro Tamura — were direct listings, secondary investments and the firm’s sweet spot, which, despite its global reach, largely remains on pan-European companies and largely startups needing Series A-stage funding, to which Atomico typically writes checks of between $5 million and $15 million in exchange for an ownership stake of between 15 and 20%.

The firm, which closed its current fund with a whopping $765 million in 2017, was also asked about whether a new, bigger fund will be announced in the near future (we’ve reported previously that a new fund is in the works), but Bendz dodged a bit, answering that we “don’t say more than at the time [other than that] we are always fundraising and [TechCrunch] will be the first to know when we have news on that [front].”

Not last, we spent some time talking about the changing complexion of investors in Europe, where pension funds contributed just $902 million of the roughly $13 billion that investment firms in Europe raised last year, according to Atomico’s own research — and we discussed why more money came from outside of Europe to fund regional startups than within it.

We’re zooming in on that part of the conversation for readers; if you missed our discussion and would like to check out other parts of it, you can find it below or read the transcript here.

TC: It was surprising to read in your recent state of European tech report that pension funds don’t account for more of the money being raised by venture firms, that much more of the funding continues to come from family offices and high net-worth individuals. Is the problem structural? Is it cultural?

HT: I think the world is waking up to the fact that European venture has comparative performance today with U.S. venture returns. There’s research in that area that’s relatively authoritative.

As a function of that, yes, you’re right [that this is an issue]. Pension funds in Europe have roughly $4 trillion under management, and a billion dollars [invested last year in venture firms] is a three-fold increase from the year before, so it is material. But as you say, if you think about the $4 trillion that they are managing, it could probably be put to good use deploying capital into venture capital funds that are looking to change the world in a positive way, because that is what impacts the pensioners who are behind that capital. [So] hopefully we’ll continue to see that trend because there’s more to do there.

TC: Also interesting from your report is the fact that $13 billion from European VCs has been plugged into startups over the last year, which means two-thirds is coming from somewhere else. Where?

SK: This is the way it should be. The companies that we think should be coming from Europe — a lot of the ones we look to back — are by ambition global companies, and being global also means having investors from other regions, so it’s not a bad thing. I don’t think we should be as investors saying, ‘Well, the funding has to all come from here.’ I think it’s a sign of success that European companies are getting investments from Chinese investors, from U.S. investors, which is really what’s happening.

HT: The universe of tech is expanding to involve many industries, so what’s naturally happening is that a lot of different types of venture capital, strategic, corporate and individual [investors are] all getting involved in what is actually happening. I think that’s a reflection of where tech is going well, and has been going for the several years if not decades.

TC: Are you seeing more money specifically coming from China because of the ongoing trade war between the country and the U.S.?

SK: There’s an interesting point there, which is that [for] certain kinds of companies, particularly a lot of frontier, deep tech companies that are considered sensitive, Europe is kind of neutral ground, so we can get customers from the U.S., customers from China, and there are examples like Graphcore, one of our portfolio companies, where you know this is tech that is not [saddled] with restrictions that might come with some ongoing spat, and that’s an advantage for us.

TC: In the U.S., over the last 10 or 15 years, far more money from Middle Eastern sovereign wealth funds has come into the U.S. Given that some of these regions don’t exactly have unimpeachable human rights records, there’s a lot of debate in the U.S. about whether or not founders and VCs should be taking their money. Do European startups care? Do European venture capital firms care?

HT: I think so, not only [do they care] about what they’re doing in terms of what you know impact to the world, but what type of capital they are choosing, And more people who are becoming founders and entrepreneurs are clearly sensitive, and the people who are tackling big missions and big problems are clearly sensitive in terms of alignment with their investors. And I think that is something that will continue to be a trend that we see with the matching of the type of capital, the investor and the entrepreneur. I think that will definitely be a continuing trend that we see.

SK: We’re very selective with our [own] LPs. A lot of our LPs are pension funds, which is a really nice virtuous cycle. The pensioners are doing well off of the investment performance that we’re working hard to deliver. And then the founders can feel good about the fact that in many cases, you know, the majority of money may be [from] pensioners.

TC: Your LPs are mostly pension funds? And family offices? And mainly European investors?

SK: I don’t have the stats at hand but I’d say mainly European, yeah.

 


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See Atomico’s most senior VCs on stage at Disrupt Berlin

09:00 | 7 December

Atomico is among the most widely respected venture firms in Europe, ranking right up there with friendly rivals like Accel London and Index Ventures.

It’s also just 13 years old at this point, compared with its more established peers. It’s easy to overlook this, considering the impact the firm has made on the European startup scene since Swedish billionaire Niklas Zennström — who’d previously cofounded Skype and Kazaa — first swung open its doors.

Consider that four funds and $1.5 billion dollars in asset under management later, Atomico is now among Europe’s largest early-stage funds. It also has one of the most enviable portfolios, with companies that include Klarna (valued at $5.5 billion), Graphcore (valued at $1 billion), Stripe (valued at $35 billion) and Compass (valued at $6.4 billion), as well as a growing long list of past winners, including Climate Corp., which sold to Monsanto for $1.1 billion back in 2013.

In fact,  it was through this last investment  that Atomico first met Siraj Khaliq, who is today among the most senior members of the Atomico team and who will be joining us on stage at TechCrunch Berlin next week for a wide-ranging discussion about where Atomico is shopping — and how the different geographies it covers are evolving.

Khaliq previously cofounded and served as CTO of The Climate Corp. and today leads Atomico’s “frontier” investment team. He’ll be talking with us along the firm’s other most senior members, including Niall Wass, who co-leads the firm’s consumer investment team; Sophia Bendz, who lead Atomico’s Nordic investment sourcing, as well as its angel program; and Hiro Tamura, who co-leads the firm’s consumer investment team with Wass and also leads its later-stage investing team. (Tamura is also the longest serving partner at Atomico after Zennström.)

What excites them, what concerns them, and how are they trying to prepare for 2020? We’re thrilled to be sitting down with them to talk about these questions and much more.

If you care about what’s happening on the ground in Europe, this is one conversation you won’t want to miss. Tickets to the show are still available. You can find the entire Disrupt Berlin agenda here.

 

 


0

Atomico Partner Tom Wehmeier reviews ‘The State of European Tech’ 2019 report

01:33 | 3 December

Atomico, the European venture capital firm founded by Skype’s Niklas Zennström, has released its latest annual The State of European Tech report, published in partnership with Slush and Orrick.

As part of the report, the authors surveyed 5,000 members of the ecosystem — including 1,000 founders — as well as pulling in robust data from other sources, such as Dealroom and the London Stock Exchange .

This year, the report reveals that the European tech ecosystem continues to mature and shows no sign of slowing — particularly highlighting the contrast from five years ago when the The State of European Tech report made its debut. Almost every key indicator is up and to the right, except, rather depressingly, diversity.

The data shows, for example, that competition for talent and access to the best founders has increased ferociously. And from a funding perspective, European founders have more choice than ever, especially with U.S. and Asian VC firms investing more and more in the region. Progress with gender diversity stalled, however, such as 92% of funding going to all-male teams.

I caught up with the report’s author Tom Wehmeier, Partner and Head of Insights at Atomico (also sometimes jokingly referred to as the “Mary Meeker of Europe”), where we discuss in more detail some of the key findings and why, it seems, that the rest of the world has finally woken up to Europe’s tech potential.

But first, a few headlines from the report:

  • European technology companies are on track to raise a record 30$B+ in funding in 2019, up from $25B the year before. (Source: Dealroom)
  • Despite failing to match the level of venture-backed exits of 2018, there was a record number of 40 $100M-plus deals as of September 2019, a size that many European tech sceptics did not believe was possible. (Source: Dealroom)
  • A number of multi-billion-dollar non-venture backed companies like Nexi and Trainline made their debut on the public markets.
  • European tech policymaking remains a mystery to many European founders.
  • When asked to describe the top priority of the European Commission in terms of tech policy, 40% of founders and startup employees say they don’t feel informed enough to comment. (Source: survey)
  • Despite this reported lack of awareness on policy issues, all respondents voted EU competition commissioner Margrethe Vestager as the person who had the most influence on European tech in 2019, good or bad. (Source: survey)
  • European parliamentarians aren’t talking about fintech and digital health, two sectors which investors poured a combined $12.7bn into last year (Source: Politico and Dealroom)
  • Europe’s diversity figures are still grim reading.
  • In 2019, 92% of funding went to all-male teams, a similar level to 2018. (Source: Dealroom)
  • There is still only one woman CTO in the 119 companies (<1%) based on a sample of executives in CxO positions at 251 European VC-backed tech companies that raised a Series A or B round between 1 October 2018 and 30 September 2019 with more than $10M funding, even though 7.5% of software engineers are women. (Source: Stack Overflow, Craft, Dealroom)
  • Looking beyond gender diversity, ethnic minorities in tech experienced discrimination at a much high rate than white peers. (Source: survey)
  • At least 80% of Black/African/Caribbean respondents who reported experiencing discrimination linked it to their ethnicity. (Source: survey)
  • 63% of women VCs reported increased focus on attending events with stronger participation from diverse founders. The corresponding number for men VCs was only 33% of female respondents suggested that their male counterparts are leaving female VCs to fix Europe’s diversity problem. (Source: survey)
  • European founders aren’t just aiming for commercial success — they are trying to solve some of the world’s largest problems.
  • One in five European founders states that their company is already measuring its societal and/or environmental impact. (Source: survey)
  • Only 14% of founders don’t believe it’s relevant for their company. Founders that are women are much more likely to be advanced in their approach to measuring impact. (Source: survey)
  • Employees are placing a greater emphasis on corporate social responsibility, with 57% citing its importance in the State of European Tech survey. (Source: survey)

Extra Crunch: It is 5 years since Atomico published the first The State of European Tech report, which really attempted to capture a data-driven snapshot of the entire ecosystem. What are some of the biggest changes you’ve seen within European tech in the intertwining years or in this year in particular?

Tom Wehmeier: If I think back to when we did the first report, people who believe that Europe could actually be an interesting player in global technology, were largely limited to people who were in the tech industry in Europe itself. If you then fast forward to today, what has clearly happened — and I think 2019 was the year where this really materialized and became part of the narrative — was that belief translating from people on the inside to a bunch of people that were on the outside.

Most obviously has been the strength of interest from from the U.S. and the number of top-tier U.S. funds that are not just increasing their level of investment activity but committing to spending more and more time here on the ground, hiring people, building teams, building a network, and getting to know companies. I think it probably surprises people to know that 19% of all rounds this year will involve at least one U.S. investor in Europe, which is more than double since since the first year we did the report.

I think the other thing, where I come back to this idea that now we have finally convinced a certain group of people about the role that Europe can play, is mainstream institutional investors. I know it is not going to be lost on you, [but] this is going to be another record year for VC fund raising from Europe. And whilst the headline numbers might not be a surprise, I think what should catch people’s attention is that the composition of the LP base here in Europe is now shifting. And finally, there’s an unlocking of institutional investors, [by which] I mean pension funds, funds of funds, insurance companies, sovereign wealth funds, who are committing to European VC at levels that are significantly increased and elevated from where they had been in the past. So, if you just take pension funds, we’re going to see close to a billion dollars invested which is up nearly three fold.

It’s a validation of what’s happening around European tech to see that now coming through and I think is ultimately something that helps to build a foundation for the next five years of success. As much as this is a report that’s looking back, it’s also about trying to understand where things go from here.

With regards to the pension funds, do you think that is driven by the general bullishness towards European tech, or do you think it’s more the macro economic reality that maybe other places where they could put their money aren’t very attractive at the moment?

I think it’s really a reflection that there’s a strong level of belief that European venture as an asset class is an attractive investment opportunity. And that is reflected by the numbers. One of the charts that we’ve got in the report is from Cambridge Associates who do the benchmarking for the VC indices… And when you look back over a 1, 3, 5, or even a 10 year horizon, the performance from European VC is demonstrating that this is a place where for anyone building a diversified portfolio, they should have some allocation. I think it’s fundamentally the strength of the investment opportunity. That is the single biggest driver for why you’re seeing this happen.

I think the biggest thing that Europe has been able to prove is that it can take a great idea and turn it into a great company and that company can scale to not just a billion dollar outcome but to a multi-billion dollar outcome and go all the way through into an IPO or into a large scale acquisition. What you’ve seen happen in 2019 is in part A reflection of what happened last year where it was obviously this record year with Spotify, Adyen, Farfetch, Elastic and others that really showed you can go full cycle from start all the way to finish. And that the magnitude of those outcomes can be at a scale that makes them globally relevant.

Are the pension funds shifting their allocation of VC away from other geographies or are they just doing more VC as a whole?

 


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London’s top consumer VCs share which trends they’re tracking

18:23 | 26 October

With 72 unicorns created since 2009 and $8.7 billion in venture funding last year, the UK is Europe’s leading startup hub.

Although it remains uncertain how Brexit will impact startups’ ease of recruiting and rapid scaling, initial pains are unlikely to displace London from its position as a global center for finance, media, retail, and technology.

As UK-based startups reach $1 billion (~£800 million) valuations at a rate of one per month, according to data from Dealroom, VC firms have raised $3.5 billion in new funds to fuel the next wave of investments.

Interested to learn where that capital could flow, I asked nine of London’s top consumer-focused VCs to find out which specific trends they’re using to identify startup investment opportunities:

  • Julia Hawkins, Partner at LocalGlobe
  • Lars Fjeldsoe-Nielsen, Partner at Balderton
  • Sonali De Rycker, Partner at Accel Partners
  • Christian Dorffer, Partner at Sweet Capital
  • Danny Rimer, Partner at Index Ventures
  • Reshma Sohoni, Managing Partner at Seedcamp
  • Niall Wass, Partner at Atomico
  • Paul Murphy, Partner at Northzone
  • Nic Brisbourne, Partner at Forward Partners

Their responses highlighted the diversify of funding interests in the ecosystem, but also show that banking, consumer health, transport, direct-to-consumer brands, and social entertainment remain hot areas.

Julia Hawkins, Partner at LocalGlobe

“I’m very focused on the healthtech sector and within consumer health, I’m particularly interested in the potential for digital therapeutics to enable people to gain control over habits and treat certain chronic conditions such as mental health. 

We’re thinking deeply about transportation, we’re already investors in Citymapper, Beryl and Voi and see the huge potential to improve how people move around cities and influence how urban centers are planned, all while reducing pollution.  

On that topic, we’re watching the climate change debate closely and I’m heartened by the fact that people everywhere are becoming wholly committed to reducing waste. Companies that can produce truly circular products for our families, homes and places of work I think will do well.

It’s an incredibly interesting time in media with titanic worlds of video, gaming and music are shifting and I believe in the transformative power of games, music and immersive experiences — TikTok and Fortnite show just how powerful these can be and I believe new platforms such as Playdeo will make consuming media and entertainment much more active experiences in the future.”

Lars Fjeldsoe-Nielsen, Partner at Balderton

“We are excited about the disruption within the European transportation sector, where we’ve seen new types of vehicles, like e-scooters from VOI, and amazing advances in autonomous mobility solutions. Time is up for car ownership in many city centers and competition is fierce for environmentally-friendly alternatives. This creates an exciting opportunity to use tech to improve public transport options and to leverage the sharing economy which Citymapper offers, as well as overhaul the car hire sector as new players like Virtuo are aiming to do.

We are also impressed by the continued innovation in the financial sector. We are long-time investors in fintech and have backed Revolut and GoCardless, amongst others. Traditional banks and financial incumbents are battling fragmented and outdated technology stacks to adapt to rapidly changing consumer demands, which creates a huge opportunity for startups.”

Sonali De Rycker, Partner at Accel Partners

“We’re excited about three key trends in consumer tech. The first is fintech, for which the UK has created a very supportive environment. A few large businesses are being built from London, like Monzo, buoyed by new rules written around retail banking and next generation financial services as well as huge, unmet customer demand.

The second is healthtech. Healthcare is a large and untapped opportunity plagued by rising costs for providers and deteriorating patient experience. We are seeing a few platform companies that are finding ways to successfully solve these problems by providing digital healthcare to consumers, like Kry out of Sweden.

 


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Sources: Lilium is looking to raise up to $500M for its electric flying taxis

14:18 | 10 October

“Flying cars” — airborne vehicles designed for urban and other short-distance commutes to replace conventional private automobiles — are (at best) still years away from being a reality, with significant safety, technology and business model hurdles to clear before they ever hit the sky. Now, sources tell us that one of more promising startups in the field, the German startup Lilium, wants to put itself into pole position, by ramping up its financial position.

Lilium has been talking to investors to raise a big round of funding, between $400 million and $500 million, according to those familiar with its plans. “It’s a very large round at a very large valuation,” one VC told TechCrunch.

It’s not clear yet who is investing in this latest round, or what that valuation might be.

Lilium already has some deep-pocketed investors behind it. In addition to WeChat owner and Chinese internet giant Tencent; it counts Atomico, founded by Skype co-founder Niklas Zennström, as a repeat investor. Obvious Ventures, the early-stage VC fund co-founded by Twitter’s Ev Williams; LGT, the international private banking and asset management group; and e24, a fund from Christian Reber (co-founder of Wunderlist and now Pitch), have also backed it, among others.

In all, Lilium has raised over $100 million in financing to date in previous rounds. But given that its plans involve not only building ground-breaking aircraft but then operating them in fleets, that’s not nearly enough to establish its service and have the impact that founder and chief executive, Daniel Wiegand, hopes he can have.

“It’s not only a benefit in terms of relieving society from transit traffic, but the much, much bigger benefit would be that everyone can use it and that people can get to their destination five times quicker, basically a five times increase of their daily radius of life,” Wiegand said in 2017. “This connectivity is going to be a huge benefit to society but also economic growth.”

Tencent, Atomico and Obvious were among the investors backing Lilium in its most recent $90 million raise. Sources tell us that Tencent is again in this latest round, and the startup has been pitching potential new investors since at least this spring, visiting with firms in Silicon Valley.

It seems this latest, bigger round has yet to close. The target size implies the involvement of big names, with big funds behind them.

“I sincerely hope they get the funds to transform transportation,” one source said.

When (if) the round closes, that would make it the biggest fundraising to date for flying taxis, an area that has lots of potential, but is still far from tested — a fact that one source suggested could contribute to the longer period needed to close the outsized round.

“It’s a known secret how hard it is to raise growth rounds in this space because it’s such a new and untested market,” an executive from another air-taxi startup noted. “Early investments were betting on the market vision and the concept of radically new mobility, but now it’s dawning on investors and others that it’s also a regulation play, and more.” That translates potentially to sustained costs, “and that may be one reason why it’s taking some time.”

Add to that the ambition at hand — designing completely new transportation hardware, then manufacturing the aircraft at scale, and then finally building a transportation, taxi-style service around them — and you can start to see why the round might be very large.

Lilium, Atomico, Tencent and Obvious all declined to comment for this story. We’ll update the post if that changes.

Up, up and away

It’s been a little over two years since Lilium and others in the same space such as Volocopter began publicly discussing their visions for the future of mobility alongside incredibly well-funded industry giants like Uber and established aerospace companies like Airbus, Boeing, and others.

Lilium raised its first round of funding in December 2016 and only a few months later, Uber convened its first Elevate conference, which included discussions on the transportation industry’s flying future.

Since those initial discussions, the companies developing technologies and services to bring those plans to fruition have made significant strides.

Earlier this year Lilium announced the first successful flight for a new five-seat electric vertical take-off and landing (VTOL) vehicle. Others are readying pilot projects in their first launch cities, with the timeline for first full-launch services currently hovering around the three-year mark from now (note: dates do get pushed back).

For Lilium and its competitors, the development of completely new, air-borne vehicles are a means to solving a specific problem: roads in and between cities are too congested with traffic; and electric, air-based options can be a way to offset that situation in an environmentally-friendly way.

Many companies building these new craft are considering taxi-style services as the first or primary point of market entry because — similar to fully-autonomous cars — the cost per vehicle will likely be too high for most individuals to consider buying for private/sole use, notwithstanding the safety features of being able to manage a full fleet autonomously that would be harder to execute with single users (who would have to be pilots, in the case of flying cars).

Lilium’s new vehicle claims to have a top speed of 300 kilometers per hour and a 300 kilometer range, which would make it capable of covering longer distances than its competitors. Lilium says this is partly because it’s designed it in the form of a small jet aircraft instead of mimicking the mechanics and form factor of drones or helicopters (the latter is the approach that Volocopter, another startup out of Germany backed by the likes of Intel and Daimler, is taking). The fixed-wing design of the plane means that it can rely on lift to stay aloft, cutting down on the power demands on the electric 2,000 horsepower engines when it’s aloft.

“This efficiency, which is comparable to the energy usage of an electric car over the same distance, means the aircraft would not just be capable of connecting suburbs to city centres and airports to main train stations, but would also deliver affordable high-speed connections across entire regions,” Lilium said in a statement at the time.

But physics is just one part of the complex system of moving pieces that would need to come together to get Lilium (or any of its rivals) off the ground.

For one, any system will need to integrate with existing air traffic control infrastructure as well — as local and national regulators grapple with increasingly crowded skies.

Another involves the logistical components to operate a service. The company also established a software engineering base in London to help build out the fleet management software and mobile phone application that will connect customers to the jets for transit, and it has been hiring.

Although we have yet to see any commercial services emerge built on the concept of fleets of providing short/medium-distance, air-based taxi-style transportation, there are a number of hopefuls that have identified the opportunity of both designing aircraft and building services around them.

Companies like Kitty HawkeHang, Joby and Uber all hope to play a role in offering short-range flights as an affordable alternative to road-based transportation. (Blade and SkyRyse, two other air taxi services of sorts, are offering more conventional helicopters and other vessels in limited launches for well-heeled travelers willing to spend the money.)

Last week at San Francisco Disrupt 2019, Kitty Hawk announced its latest vehicle, Heaviside. It’s an electric aircraft designed to be a personalised vehicle, less obtrusive than a helicopter, ableto go anywhere and land anywhere fast and quietly, and as easy to operate as “pushing a button,” according to CEO Sebastian Thrun.

 


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Automation Hero picks up $14.5 million led by Atomico

17:53 | 13 March

Automation Hero, formerly SalesHero, has secured $14.5 million in new funding led by Atomico, with participation by Baidu Ventures and Cherry Ventures. As part of the deal, Atomico principle Ben Blume will join the company’s board of directors.

The automation startup launched in 2017 as SalesHero, giving sales orgs a simple way to automate back office processes like filing an expense report or updating the CRM. It does this through an AI assistant called Robin — “Batman and Robin, it worked with the superhero theme, and it’s gender neutral,” cofounder and CEO Stefan Groschupf explained — that can be configured to go through the regular workflow and take care of repetitive tasks.

“We brought computers into the workplace because we believed they could make us more productive,” said Groschupf. “But in many companies, people spend a lot of time entering data and doing painful manual processes to make these machines happy.”

The idea was to give salespeople more time to actually do their job, which is selling to clients. If all the administrative and repetitive ‘paperwork’ is done by a computer, human employees can become more productive and efficient at skilled tasks.

By weaving together click robots, Automation Hero users can build out their own workflows through a no-code interface, tying together a wide variety of both structured and unstructured data sources. Those workflows are then presented in the inbox each morning by Robin, the AI assistant, and are executed as soon as the user gives the go ahead.

After launch, the team realized that other types of organizations, beyond sales departments, were building out automations. Insurance firms, in particular, were using the software to automate some of the repetitive tasks involved with filing and assessing claims.

This led to today’s rebrand to Automation Hero.

Groschupf said that by automating the process of filling out a single closing form, it saved one insurance firm’s 430 sales reps 18.46 years per year.

Automation Hero has now raised a total of $19 million.

“We’re really excited with Atomico to bring on a great VC and good people,” said Groschupf. “I’ve raised capital before and I’ve worked with some of the more questionable VCs, as it turns out. We’re super excited we’ve found an investor that really bakes important things, like a diversity policy and a family leave policy, right into the company’s investment agreement.”

Though he didn’t confirm, it’s likely that Groschupf is referring to KPCB, which has run into its fair share of controversy over the past few years and was an investor in Groschupf’s previous startup, Datameer.

 


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More Atomico promotions sees three new Partners at the European VC firm

13:06 | 5 March

Atomico, the European venture capital firm founded by Skype’s Niklas Zennström, sometimes feels like it’s on a perpetual hiring and promotions spree, even if a number of partners have also departed over the years.

Most recently, in November Sophia Bendz, the former Spotify Global Director of Marketing, promoted to Partner. Bendz had already spent two and a half years as an Executive-in-Residence at the London-based VC firm. The same month, Partner Carolina Brochado left to join Softbank’s Vision Fund to help it source more deals in Europe.

Today we can add three more Partner promotions to the list, including Bryce Keane, who for the past two and a half years has been Atomico’s Head of Communications.

Prior to joining Atomico, Australia born Keane (who I promised not to refer to as the Aussie spin doctor — sorry!) founded the PR arm of creative agency Albion and worked with a number of now household names in European tech, such as TransferWise, years before the company was a celebrated fintech unicorn.

He also co-founded 3beards, which among other projects (involving beards, beer and the Unicorn Hunt jobs board), was the custodian of one of London’s most popular tech networking events, leading one BBC journalist to dub Keane “the social secretary for London’s tech community”. With my aversion to both crowds and heaping any resemblance of praise on PRs, I couldn’t possibly comment.

But what I will say, having covered TransferWise from Day One and reporting on Atomico pretty relentlessly over the years, is that Keane is possibly one of the hardest working flacks I know and certainly one of the best briefed, typically making it his business to know the founders and startups he supports at least as well as anyone. Well, almost anyone.

Also being promoted to Partner is Alison Smith, Atomico’s Chief of Staff. She has been with the VC firm for four years and as Partner will continue to lead key projects for Atomico, both internally and externally.

And last but definitely not least is Camilla Richards, who for the past four years has been Head of Investor Relations, overseeing Atomico’s own fundraising and its important relationship with LPs.

In her new role, she’ll continue to manage those relationships, as well as facilitating introductions between founders and LPs where new business opportunities arise or if direct investment makes sense.

“Bryce, Alison and Camilla have the ambition, shared mission and energy we need as we continue to build Atomico. I’m proud to have them as Partners at Atomico and excited to see what they will achieve in the years ahead in their new roles,” writes Atomico’s CEO and Founding Partner Niklas Zennström in a blog post.

Meanwhile, in addition to Atomico’s three new Partners, the European VC firm is making a number of promotions within its investment team. Senior Associate Stephen Thorne becomes a Principal, and Associates Hillary Ball, Will Dufton and Adam Lasri are moved up to Senior Associate. Notably, I’m told Lasri will also be relocating permanently to Paris, becoming Atomico’s first full-time investment member on the ground in the French capital city.

 


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Clutter confirms SoftBank-led $200M investment for its on-demand storage service

08:09 | 21 February

There’s plenty of speculation right now around apparently disgruntled investors in SoftBank’s Vision Fund, but the drum continues to beat and the checks continue to be written. The latest deal for the $100 billion mega-fund is Clutter, an on-demand storage company that pulled in $200 million in new financing for growth.

Eagled-eyed viewers will recall that TechCrunch broke news of an impending SoftBank-led round of that size back in January, and now it is official.

The startup is one of a number of companies that provide storage options for consumers who don’t want to part with items but equally don’t have the capacity to keep it where they live. The service is based around an app that is used to summon Clutter staff to pack up, take away, store and (later) return possessions, but it can also be used for regular house moving, too. Competitors in the space include MakeSpaceOmniTroveLivible, and Closetbox.

Joining SoftBank in the deal are existing Clutter investors Sequoia, Atomico, GV, Fifth Wall and Four Rivers who fronted the company’s last round, a $64 million raise nearly two years ago. This new capital means that Clutter has raised $297 million from investors to date.

There’s no confirmation of a valuation for the startup, but our well-placed sources previously told us that this round would value Clutter at between $400 million and $500 million. One thing that is confirmed, however, is that SoftBank’s Justin Wilson will join the board.

The money will go towards expansion in the U.S. as Clutter explained in an announcement, but there are hints that it harbors overseas ambitions, too:

This funding will accelerate the company’s expansion into new markets in 2019, including Philadelphia, Portland and Sacramento. It’s also doubling down in its existing markets in the greater areas of New York, San Francisco, Los Angeles, Chicago, Seattle, San Diego, Orange County and northern New Jersey, as it marches toward a goal of operating in America’s largest 50 cities and expanding internationally.

“We believe that storage is a vast and traditional market with huge potential for disruption, and Clutter’s technology and superior customer proposition will help facilitate future growth in expanding urban communities where space is at a premium,” said SoftBank’s Wilson in a statement.

 


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