Atlas Venture ups sticks to Boston

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We all know the crisis in the venture capital community is starting to have real word effects, but for some it means totally changing how they run. Today Atlas Ventures announced it is moving its entire operation to Boston, bringing together its US and European teams in one place, and reducing its headcount.

Atlas says its fundamental international early stage investment strategy “will not change” nor will its plans to “add new European investments” to its international portfolio. However, being based in Boston – with the normally European-based partner Fred Destin moving there as well – still deals a blow to the European startup eco-system and potentially calls into question Atlas’ position in the longer term. It is however, a boost for the U.S. East Coast system.

Long time partner Christopher Spray remains in London to manage the existing European portfolio. Graham O’Keeffe and Regina Hodits have transitioned to Venture Partner roles. Associate Max Niederhofer has become an official Entrepreneur-in-residence and is working on his own startup.

“Having all of us together in a single location will streamline decision-making and increase overall operating effectiveness,” said Partner Peter Barrett.

On the phone Destin told me the decision had come because Atlas felt it could make decisions a lot faster if everyone was in the same place. Plus, this is “Definitely reflects a long term trend to move towards smaller funds.”

He can say that again.

Atlas Venture has been around since 1980, investing in over 350 companies in more than 16 different countries. It’s currently investing from its eighth fund which closed in late 2008.

This is part of the wider changes going on in VC, but it is indicative of the fact that it is now very hard to find institutional Limited Partners willing to back VCs, especially in Europe.

  • anon

    Roll on cursing of Atlas because we (the ‘European start-up ecosystem’) got dumped.

  • Timmeh

    Well obviously…. didn’t anyone else hear about Fred Detin’s new female clothing label??

  • Ian Hogarth

    From what I’ve seen at Seedcamp Fred has been a really positive force and charming personality in the European start-up community. He will be missed.

  • Mark Littlewood

    Sad news indeed although it is not far to accuse them of abandoning European entrepreneurs (or at least not willingly). I think this is more data that calls into question the concept of global VC firms.

    Atlas Venture have been a force for good in Europe. I can’t help thinking it is ironic that virtually no VC has been able to scale their model though.

  • David Ulevitch

    This article needs some serious editing, for starters.

    But also, Atlas’ comment about the move to smaller funds was not deliberate. They reportedly couldn’t close more than $200 million of their last $500 million dollar fund. That’s a pretty bad sign from investors (when NEA is closing multi-billion dollar funds) and good reason to cut back if you ask me.

    That said, the venture math doesn’t work at those numbers and NEA must be operating at PE metrics (2x or 3x returns) with that fund size.

  • DefunktOne

    A member of Atlas Venture/Europe bought two t-shirts from us just last week…

    • Max Niederhofer

      Yeah, that was me. I bought the Lehman one for a friend and the Bethlehem Steel one because I think it’s just made of pure awesomeness.

      Rock on, DefunktShirtCompanyDude.

      • DefunktOne

        Awesome Max and thank you very much! I love seeing the diversity of people who touch our brand. It always amazes me and having lived in London for a few years, I am always glad to see Europe represent!

  • Nigel Glass


  • Steve

    These guys couldn’t raise (comment above re 200/500 is right) and have had an Associate position open for nearly a year.

  • Fred Destin

    Hi guys, to be exact, we raised a $283M fund in December 2008, which was below target of $350M. If you think closing a fund in Dec 08 was a walk in the park, think again :-) We were not happy about being below target but in retrospect we were very happy with raising an amount of money that was critical mass for us.

    We did not need to make this move; it was our decision to have all people in one room so we could function better, act as one, and ultimately make better investments.

    I do believe smaller funds are better, especially in early stage. Small teams, simple operations, 100% focus on finding great entrepreneurs and building the businesses. I was never a fan of larger institutional platforms, personally.

    You can even look at Accel Europe as a parallel. 4 investing partners, local operation, works well.

    • azeem

      Definitely a blow for the European ecosystem– hard to see how they can be active in the UK being based in Boston, possibly more like a Bessemer–east-coast based and occasionally doing deals in London.

      Hopefully it’ll be seen as an opportunity by entrepreneurs ready to make the switch to formal funds in the £50 to £100m range.

    • taylor wescoatt

      We’ll definitely miss you in London Fred. Hope there’s a phat travel budget in the works.

  • Mitch

    Plus – Boston is on the innovation re-bound due to the down economy. With less people being hired away the past 2 years to the Valley from our universities there is a massive abundance of talent here now.

  • Be a straight-shooter
  • Daniel DiRico

    Welcome back to Boston.
    The startup buzz here has really picked up lately.

  • Nic Brisbourne

    The European startup ecosystem lacks critical mass in part because there is insufficient venture capital in the market, so Atlas will be missed. I don’t think this signals a crisis though – we at DFJ Esprit recently announced a first close on our new fund, Doughty Hanson did the same and up to summer 2008 before Lehmans went under fundraisings in Europe were hitting post bubble records.

    The startup scene here is still in its infancy and I would chalk this up to growing pains. The long term fundamentals remain strong.

    • Fred Destin

      Well done Nick. Congrats ! Agree Europe remains attractive for VC and should have golden years. Needs to up its game IMHO though. Time to get out of infancy too !! (our first deal was 1984, Business Objects went public in 1995 :-)).

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