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Atomico cofounder Ljungman launches Moonfire Ventures

Mattias Ljungman believes there's a serious gap in Europe's seed stage investment. His new firm's trying to change that.

By Chris O’Brien

Credit: Moonfire Ventures founder Mattias Ljungman

For more than a decade, Mattias Ljungman helped shake up Europe’s once-sleepy VC scene as the cofounder of Atomico, the $2.7bn firm that has backed the likes of Klarna and Lilium. 

Now he’s back with a new firm to fill a gap in seed stage funding.

Today, Ljungman has formally launched Moonfire Ventures, which has raised a $60m fund to target seed and pre-seed deals. For Ljungman, Moonfire is the latest sign that Europe has only just started to tap into a vast entrepreneurial potential.

“This ecosystem is really on fire,” Ljungman said. “It’s really sort of a golden era.”

Ljungman first disclosed the founding of Moonfire back in July 2019 along with the news that he would be departing Atomico. He cofounded the highly influential firm in 2006 with Skype founder Niklas Zennström.

But as much as Atomico was part of the transformation of the European ecosystem, Ljungman felt that the region’s entrepreneurs needed another catalyst at the earliest stages to encourage them to be bolder. 

He figured that the best way to do that was to focus on pre-seed deals starting about $100k up to seed deals of $3m.

“The seed stage is under-invested in Europe,” Ljungman said. “I think we have some amazing funds in the US and there’s quite a lot of them. And while here in Europe we do have some really good funds, it’s just not the depth and breadth that we need.”

Over the past two years, he’s been raising that fund and building out his team. The LPs include US-based seed firm Cendana, Utah School & Institutional Trust Funds Office and Reference Capital, among others. The team includes partners Mike Arpaia and Candice Lo. 

Moonfire will focus on digital health, the future of work, gaming and fintech. It’s already made 12 investments, including Humaans, Electric Noir Studios, Skunkworks and Homerun.

Data-driven investing

To be successful, Moonfire will have to address two big obstacles. The first is growing competition for deals, including from US firms. Secondly, Europe remains a fragmented market and a hodgepodge of local ecosystems.

Ljungman has said Moonfire will be methodical and data-driven in its approach to investing. The firm will still seek to leverage its deep contacts and Ljungman’s mammoth Rolodex, but even post-Covid, it’s not enough to solely rely on the personal networks that VCs have traditionally used.

“I think we’re going to be moving more to a data-driven approach, which I see is something that is augmenting that personal approach,” he said. “I describe it as kind of like we’re going to be putting on a bionic suit.”

Europe is the new Boomtown

While Ljungman has had a front-row seat in Europe’s startup renaissance, he’s clearly more enthusiastic than ever about its prospects.

That remains true even as countries like Germany and France are grappling with Covid-related recessions. On a larger scale, there remains a yawning gap between Europe’s 25% share of global GDP and its 13% share of global startup investments. Indeed, during Covid-19, tech has demonstrated its economic resilience.

“The tech ecosystem, which is the future economic driver, continues to grow,” he said. “It’s defying gravity.”

During a conversation with Sifted, he rattled off a series of stats to make his case that things are shifting into a higher gear: $20bn raised by European startups in Q1 compared to $40bn for all of last year; plus 16 new unicorns in 2021 and a surge in exits. 

That success has created an increasingly fertile terrain thanks to repeat entrepreneurs who are more experienced and have even bigger ambitions.

“Success breeds success,” he said. “It’s just a compounding factor of what’s been happening for a very long time. So I think it’s a great time to go out to that next generation.”

Chris O’Brien is a Sifted correspondent based in France. He tweets from @obrien

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