Skype founders raise £110m for European start-ups

Niklas Zennström and Janus Friis's company Atomico is looking for early-stage companies that can provide 'outsized returns'

Niklas Zennström and Janus Friis have raised $165m to invest in European start-up technology companies, the Skype co-founders said on Monday.

The raising of these funds, equivalent to £110m, will be invested through Zennström and Friis's venture-capital vehicle Atomico, which they formed in 2006. This will be London-based Atomico's second wave of investment, and their first concentrated on Europe.

Atomico said it will invest in early-stage, high-growth technology companies that can provide "outsized returns" over the long term.

"We will seek to invest in exceptional entrepreneurs who are building exceptional businesses," Zennström said. "We will target companies that we believe have the potential to generate significant growth, transform their industries and deliver strong returns.

"Atomico is different as it brings highly relevant management experience, unique market perspectives, a diverse worldwide network as well as capital to these companies."

Zennström and Friis have already assembled a small but experienced management team. Four of the nine executives formerly worked for Skype, while the others are a combination of older investors and young entrepreneurs.

In its first funding round, Atomico invested in blog search engine Technorati, Wi-Fi sharing provider FON and internet radio company Last.fm, now owned by ZDNet UK's parent company CBS Interactive. The second round has already seen an investment in Jolicloud, a company that is writing a netbook operating system that is now in beta.

The second round comes at a time when many firms are struggling to find investors amid the uncertain economic climate. There is also the issue of the poor record of technology start-ups in the UK, according to Bart Clarysse, professor of entrepreneurship at London's Imperial College. Clarysse said in his inaugural lecture last year that European technology start-ups perform poorly compared with their American counterparts, with just 36 percent surviving for 10 years.

Clarysse's assertion is backed up by the Legatum Institute in its latest annual rankings, which placed the UK second behind the US in entrepreneurship and innovation. However, the UK leads Western Europe as well as Japan, Taiwan and South Korea in those categories, the institute found.

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