Atlas Venture to invest $950M in tech companies
A parallel fund for entrepreneurs and other individual members of Atlas Venture's network, which will invest alongside the main fund, is also currently being raised. Atlas Venture will maintain its traditional focus, primarily on early-stage companies in communications, information technology and life sciences. Atlas Venture's sixth international fund brings total funds under management to over $2.5 billion, with active investments in more than 100 portfolio companies worldwide.
"Our core strength is the enormous depth and breadth of our portfolio," says Christopher Spray, a Senior Principal of the firm. "We are diversified across sectors, geographies and stages of investment. This diversification helps us to deliver stable performance even during turbulent times in financial markets."
Strong Performance
The new fund comes on the heels of a strong year for Atlas Venture's portfolio. During 2000, fourteen companies in the portfolio completed IPOs, and a further eleven companies were acquired.
Notable among the successes in the communications portfolio were Orchestream Holdings plc (LSE: OCH; Nasdaq: OCHS), which went public on the London Stock exchange in June; Element 14, Inc, which was acquired by Broadcom Corporation in October; Cerulean Technology, Inc, acquired by Aether Systems, Inc; T.sqware, Inc, acquired by GlobeSpan, Inc; and The industree BV, which merged with BarcoNet NV.
Returns in the information technology sector came mainly from enterprise software companies such as RightPoint Software, Inc, acquired by E.piphany, Inc; Trading Dynamics, Inc, acquired by Ariba, Inc; OnDisplay, Inc, acquired by Vignette Corp. in July; and SpeechWorks International, Inc (Nasdaq: SPWX), which completed its IPO in August.
The largest number of IPOs, eleven in total on eight different stock exchanges, came from the life sciences portfolio. These included: Actelion Pharmaceuticals Ltd (SWX: ATLN), Ciphergen Biosystems, Inc (Nasdaq: CIPH), Crucell NV (Nasdaq: CRXL; and Euronext Amsterdam: CRCLCRXL), deCODE genetics, Inc (Nasdaq and Easdaq: DCGN), Exelixis, Inc (Nasdaq: EXEL), IsoTis NV (Euronext Amsterdam: ISO), MediGene AG (Neuer Markt: MDG), Modex Therapeutics SA (SWX: MDXN), Neurochem, Inc (TSE: NRM), Novuspharma SpA (Nuovo Mercato: NOV.MIL), and Variagenics, Inc (Nasdaq: VGNX).
Outlook for 2001
"While the prospects for 2001 are, of course, less certain," says Christopher Spray, "we have many companies that are well placed to take advantage of the IPO markets whenever they reopen and a number of our portfolio companies are in merger discussions."
Atlas Venture has traditionally invested in communications, information technology, and life sciences. In the information technology sector, Spotfire Holdings, Inc, a leading provider of eAnalytic applications and services, maintains US headquarters in Cambridge, MassA and European headquarters in Göteborg, Sweden.
eRoom Technology, Inc, which provides Internet-based software and services for collaboration in the extended enterprise, has recently been publicly recognized by press and peers for its product and leadership excellence.
Phase Forward Incorporated, a pioneer in software and services for Web-based clinical trial management, last month reported record growth through both software licensing and services and extended its relationships with twelve of the top fifteen global pharmaceutical companies.
In the communications sector, Atlas Venture has built up a well-regarded portfolio of optical components and systems companies. Quantum Bridge Communications, Inc is a leader in the metro systems market, and OMM, Inc is a leader in the optical components market.
More recent portfolio additions such as Telephotonics, Inc and WaveSmith Networks, Inc, both started during 2000, are also attracting widespread attention.
Meanwhile, in Europe, Atlas Venture has been adding to its portfolio of companies addressing different aspects of the wireless marketplace. Systemonic AG, located in Dresden, develops programmable DSP solutions for broadband wireless communications markets as a fabless semiconductor company. Originally funded by Atlas Venture in 1998, Systemonic raised a large second round late last year to fund expansion, and RadioScape Ltd, focused on embedded software for several segments of the wireless market, announced major partnerships with Texas Instruments.
More recent additions are Digital Rum Limited, wireless infrastructure software; Netonomy, Inc, self-service e-care solutions for telecommunications companies; and Cognima Limited, wireless personal information management software.
Atlas Venture was one of the few venture capital firms to maintain a significant commitment to life sciences investing during the late 1990s. A steady, consistent, long-term approach, which paid off last year in a record number of IPOs, is also expected to produce a further healthy crop of companies benefiting from the "post-genomics" era. Significant among these is Structural GenomiX, Inc, based in San Diego, an ambitious seed project originally funded by Atlas Venture in 1999, and now emerging as a well-capitalized leader in Proteomics. Promising new companies added to the portfolio last year include CellZome GmbH in Germany and Signature BioScience, Inc in California.
International Scale
Atlas Venture is the only large, early-stage technology venture capital firm to be fully established on both sides of the Atlantic. The benefits of the international venture capital model were not widely acknowledged when Atlas Venture pioneered the model in the mid 1980s, but it is now becoming accepted as a critical factor for future growth and success.
"We are now seeing the same scale factors become important in venture capital as we see in other businesses," says Christopher Spray. "The industry is moving away from the ‘cottage industry' phase -- when everything depended on small local networks -- and moving to an ‘industrialization' phase when scale and scope of international coverage become key. We have seen this happen in the buyout part of the private equity business, we've seen it happen to technology investment banking, and now we're seeing it in venture capital. We expect quite rapid consolidation in the venture capital business over the next few years, particularly in Europe, where the more fragmented nature of the market, and the key importance of access to the US market, will pose an increasing challenge for firms focused only on a particular vertical sector or geographic region."
Team Building
During 2000, Atlas Venture added two new investment Senior Principals, Bernard Gautier, former head of Bain's European IT and Communications practices, to head up its Communications team in Paris; and Laura Jennings, a former senior Microsoft executive who had run the MSN Network and led Microsoft's own strategic planning process. Ms. Jennings is leading Atlas Venture's West Coast activity, and has opened an office for the firm in Seattle, an area of the US with remarkably few well-established international venture capital firms, given its importance as a technology center. "There are some excellent seed stage VCs in Seattle," says Laura Jennings. "I saw an opportunity through Atlas Venture to work with them, and provide international reach to their fastest-growing companies."
Atlas Venture has also added a small team of seasoned executives and younger investment associates to develop Atlas Venture's internal support infrastructure, and to deliver more extensive systematic support to portfolio companies. Atlas Venture focuses its work with early-stage portfolio companies in three key areas: defining the product and corporate strategy; recruiting the senior management team; and providing access to other sources for strategic and venture capital financing.
About Atlas Venture
Atlas Venture is the leading international, early-stage venture capital firm investing in communications, information technology and life sciences companies. With offices in Amsterdam, Boston, London, Menlo Park, Munich, Paris, and Seattle, Atlas Venture's investments are split evenly between the United States and Europe.
Founded in 1980, Atlas Venture has organized six international funds, and currently manages over $2.5 billion in committed capital. The Atlas Venture investment team is comprised of seasoned operating executives and career venture capitalists who have been deeply involved in the formation and development of more than 300 companies worldwide. For further information please call Davia B. Temin of Temin and Company at (212) 588-8788. On the web, Atlas Venture can be visited at www.atlasventure.com.
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