Atomico Ventures, a European VC fund run by Skype co-founder Niklas Zennström, today announced that it has closed its second fund — and first institutional one — with $165 million in capital commitments. So we spent some time on the phone this morning with Zennström, in order to learn more about the fundraise and the state of European venture capital.
Last May, Atomico said in an SEC filing that it was looking to raise up to $266 million. Why did you close on so much less?
I wouldn’t say we closed on much less. The thing our lawyers told was was that we needed to set a limit in the SEC filing, because if we went above it we’d have to do another filing. So we basically put a high number with a really big buffer. The reality is that, with the kind of investments we’re looking at, you don’t want to have too big of a fund.
So what was the actual target?
We had a flexible number. We hadn’t raised an institutional fund before, so we listened a bit to the market.
How much did last year’s situation involving the Skype buyout affect Atomico’s fundraising? Did you get distracted?
My focus was very much Atomico, both in terms of fundraising and investing in seven very exciting companies last year. We had a team conducting the negotiations around Skype and the buyout, so it wasn’t much of a distraction.
Given your experiences with Skype and eBay, do you look at a potential portfolio company sale differently than might a career VC? Or is a good price simply a good price.
If it’s a good price then it’s a good price. But it’s also based on timing. One thing Silicon Valley VCs have been better at than London VCs is to hold onto winners and not exit too early. When a company gets a phone call to be acquired, the answer should usually be no. It’s all about understanding when there is a strategic window and when there isn’t a strategic window.
Has the new fund made any investments yet?
We actually made the first investment over a year ago, and all seven deals we did last year are in the portfolio. Atomico’s partners are the fund’s largest LP, so we didn’t have to wait… We kept being able to show LPs how our portfolio was growing and the types of deals we were doing, which I think helped us fundraise.
The European IT startup scene looks a bit moribund from this side of the Atlantic. Is that a misperception?
I think there is vibrancy. And I also think everything is relative. There are more things going on in Silicon Valley than in London, but I see a trend of more and more activity here with lots of interesting opportunities.
With the rise of companies like Skype, there’s been a regeneration of people who had been working as product managers or in other positions who now are going out to start something new.
Are the best entrepreneurs staying, or do many still feel their best chance of success is in the States?
That was typically the old model: “I want to be a real entrepreneur so I need to move to Silicon Valley, because of capital, talent and business development opportunities.”
But since the world is getting more and more connected, there is less reason to be in a certain location. So more and more people are staying here and to build their business.