It has been a busy few months for Atomico, the European venture capital (VC) juggernaut founded by Skype co-creator Niklas Zennström some 16 years ago. After promoting three investors to partner back in April, it then brought in former Revolut and Uber executive Don Hoang as partner a month later.
To cap off this frenzy, Atomico today announced that former Balderton Principal Laura Connell has joined as its latest partner to work on Atomico's growth-stage investments.
The appointment comes a little more than two years after Atomico closed its fifth fund at $820 million, and with a reported two new funds in the works totalling more than $1.3 billion, it's clear that the company is preparing to scale despite a broader economic downturn.
An 'unprecedented correction'
There's no escaping the elephant in the room here. Mass layoffs are affecting companies of all sizes and industry, while a giant reset has hit valuations for public and private companies alike. Just this week, Atomico's portfolio company Klarna confirmed a fresh round of funding at a whopping 85% lower valuation than the corresponding period last year.
While all this upheaval undoubtedly hurts those inside the companies themselves, it's not necessarily the worst time to be an investor, with valuations being brought crashing back to reality after a pandemic-driven period that birthed an insane amount of unicorns. And the experiment of force-feeding late-stage startups infinite money is apparently over.
"We've all had a front row seat for what's been really an unprecedented correction," Connell told TechCrunch. "I think that's a product of normalization after the exuberance of 2020 and H1 (first half) 2021, and an era of cheap money, right? So in some ways, talking purely on a macro basis, the world [today] looks in some ways more normalized. And that correction, while painful, is also an opportunity for us as investors, and for the best founders to really show their true colours and get ahead of the pack."
Atomico has already made somewhere in the region of a dozen investments this year, and there's already evidence of new funds in the works across the venture and growth spectrum (Connell wasn't at liberty to discuss any details). So it feels like there is going to be a lot of money still floating around for the right kinds of startups. For growth-stage companies, like the ones that Connell will be focused on across the consumer and enterprises spaces, the same research and due diligence will be required as before to build what Connell calls a "high level of conviction."
"I think for us as investors, the best investments come from really deep insights," Connell said. "So we have an opportunity here to kind of keep building unique and differentiated insights and high conviction. And keep the threshold high for the kinds of founders we want to work with."
It's worth noting that Connell was already well-acquainted with Atomico before quietly joining last month, given that both Balderton and Atomico have invested in a number of the same companies through the years such as Truecaller and Graphcore.
More recently, however, Connell was an investor at Marcho Partners, a global tech hedge fund focused on backing publicly listed companies. This was very much a strategic move, according to Connell, who was seeking to diversify her experience.
"It's fairly well accepted that lots of funds are looking at ways to expand their capital base from private to the public markets," Connell said. "I was asking myself how best I could serve a lot of growth-stage founders that I worked with, and it seemed a good time to get some experience building a fund out on the public side. But my heart has always been on the private side -- my ambition, in the end, was always to come back full-time to do private, albeit with that public market experience."
By dipping into the public investment sphere for a year, Connell said that this experience could ultimately benefit all the venture- and growth-stage companies that perhaps have one eye on the public markets.
"First and foremost, it's helping founders navigate what are quite choppy capital markets, be it on the later-stage private side or if they think about going to market for an IPO or a direct listing -- and how to approach the public investor mindset, which is a different animal," Connell explained.
And then there is the regional versus global aspect to consider. Balderton is a very Europe-focused fund, as is Atomico, whereas her time at Marcho took Connell into the U.S., Southeast Asia and Latin America (as well as Europe). This could prove beneficial for current and future portfolio companies looking to expand their horizons.
"I've spent a lot of time looking at some of the more nascent emerging ecosystems in places like Brazil, Mexico and Indonesia -- all that additional knowledge is hopefully something that is useful to founders in Europe as they think about going global," Connell said.