Atomic IV: $320 Million during the Best Time to Build
By Jack Abraham
“Roughly half of Fortune 500 companies were founded in times of recession or economic crisis. Necessity is the mother of invention,” Morgan Stanley.
Uber. Airbnb. Slack. Square. Instagram. All born in the aftermath of the Global Financial Crisis fifteen years ago. Companies like Salesforce, Paypal, and Netflix experienced their most formative early years, rising out of the rubble of the dot-com crash more than two decades ago. Going back even further, companies like Microsoft (1973), Disney (1929), and Procter & Gamble (1837) also established themselves during times of economic crisis or depression.
Why are so many of the most iconic and impactful companies started and built during the most challenging economic times? And why is today the best time in decades to start a company (which many agree with)?
First and foremost, talent. The most valuable asset for almost any company is its talent, and of course, it’s also where the vast majority of startup capital is spent. Over the past year, not only have hundreds of thousands of talented tech workers suddenly become free agents, but many more are considering change while surrounded by displacement. We’ve certainly experienced that at Atomic, from the 3,000 applicants for an engineering internship that we barely advertised to the 1,000 + applicants for our Atomic Builders Summit. In a market like this, the volume and caliber of talent flocking toward early-stage opportunities rise while costs decrease — all positive trends for early-stage startups.
Companies built during economic downturns have no choice but to be extremely scrappy, capital efficient, and disciplined, which leads to startups with better habits, fundamentals, and rigor than those built while capital is plentiful. Markets get less competitive when a dozen clones can’t be instantly funded, and marketing and sales costs decrease as a result. Ultimately, it’s much easier for startups with the strongest teams and products to rise above the noise and win. These battle-tested companies emerge with built-in advantages when markets bounce back.
Scaling Up
That’s why we believe the time is now to scale up Atomic. Today, we’re grateful to share that we’ve raised and launched Atomic Fund IV, our new $320 million fund exclusively for starting and building companies. Backed by top-tier endowments, foundations, and institutions globally, this brings us to over $750 million in total assets in management, the largest venture studio fund in the technology industry. But most importantly, it gives us substantial capital to deploy and build during this unique moment in time. At a time when many are retrenching and have slowed down, we’ve started more companies in more industries than ever over the past year.
We’ve expanded our team substantially to support this scale, headlined by the addition of Kristin Schaefer as our third General Partner. Kristin is someone I’ve personally known and admired for over a decade and has joined Chester and myself to help lead and scale our firm into the future. Kristin most recently spent eight years at Postmates. She joined as the tenth employee, building out growth, analytics, finance, and, eventually, as CFO, leading the company’s near-IPO process and ultimate acquisition by Uber for $5B. Before Postmates, Kristin worked at PayPal for David Marcus’s strategy team and Clarium on Peter Thiel’s global macro investment strategy. As an angel investor in Postmates myself and someone who helped the founders with the 0-to-1 process, I can confidently say that their journey from a novel food delivery idea to a $1B revenue run-rate company that raised nearly $1B in funding literally would not have been possible without Kristin. I couldn’t be more excited for her to inject that same rigor, discipline, and mindset to grow and scale our portfolio.
Over the past year we’ve grown to a total team of over 75 builders, started 16 companies and secured funding to fuel the growth of some of our most promising breakout companies, including Butter, OpenStore, and Replicant. We’ve continued to scale our “0-to-1” team, to drive ideation, research, diligence, prototyping, and validation. As a result, our ability to test and validate (or invalidate) ideas continues to accelerate, resulting in faster development and go-to-market speed. The plethora of building blocks available to startups has ballooned; for example, the advent of large language models (LLMs) fueling a new wave of exciting AI companies. With this in mind, we recently welcomed two new fellow entrepreneurs as VPs, Lauren Dickstein and Michael Stenclik, alongside Jordan Kong, Phil Liu, and Sharon Winter to help drive our 0-to-1 process. Our “1-to-n” team of specialists has scaled as well across engineering, design, sales, marketing, recruiting, people operations, finance, accounting, legal, operations, and more.
As an entrepreneur, it’s important to reflect on the process of building from scratch and the potential for building at scale. Just as venture capital and private equity models were once new inventions, we are proud to have pioneered and continue to try to perfect the venture studio fund model over the past decade. When Atomic introduced its first studio fund in 2012, it was a new way to build companies, and a new asset class to capital allocators. Today this model is now proven, popular, and frequently emulated. With a stronger position and team than ever, we’re committed to investing in the future, and we invite you to come build with us. And, if history repeats itself, maybe we’ll start the next iconic company together.
