Atomic Raises $260M to Build and Fund Startups
Atomic: A Venture Studio Built on Bold Bets
Jack Abraham demonstrates significant confidence in the ventures he is developing. A degree of self-assurance is essential, particularly when an investor chooses to exclusively fund their own startup initiatives, a strategy Atomic, Abraham’s San Francisco-based venture studio, has employed since its inception nine years ago.
Early Funding and Origins
The studio was initially capitalized with $10 million, largely from Abraham’s personal funds. This capital stemmed from the 2010 sale of Milo, his first startup – a local shopping engine – to eBay for $75 million. Prior to this, Abraham had left Wharton University after receiving $500,000 from a professor who recognized his potential for building successful companies, given his father’s background as the founder of ComScore.
Early Investments and Idea Generation
Following the sale of Milo, Abraham dedicated over three years to product development within eBay, gaining experience in team leadership. He then began making angel investments, including in companies like Uber and Pinterest, while simultaneously refining his own concepts. He claims to have originated the idea for Postmates, providing the initial concept to the founders who were initially focused on a B2B venture.
The Founding of Atomic
Abraham generated numerous ideas – numbering in the hundreds, he states – which ultimately led to the creation of Atomic. He later welcomed Andrew Dudum, a fellow Wharton student and son of entrepreneurs, to the founding team. Dudum, like Abraham, had left college to pursue opportunities in the startup ecosystem, having previously joined a Sequoia Capital-backed startup.
Growth and Expansion
Initially, Atomic focused on a single company, then expanded to two. By 2018, the firm had assembled a team capable of managing essential startup functions, such as recruitment and accounting. This enabled the launch of 10 companies, attracting $150 million in investment to fuel further startup creation.
Partnerships and Leadership Changes
Abraham and Dudum subsequently added Chester Ng and Andrew Salamon as general partners. Salamon later departed to establish his own venture studio, Material, alongside Blue Apron founder Matt Salzberg in 2019. That same year, JD Ross, a co-founder of the publicly traded company Opendoor, joined Atomic as a general partner.
Recent Developments and Funding
Atomic’s momentum has continued to build. The studio now boasts the creation of “dozens” of startups, including approximately one per month in the past year. Recently, it secured $260 million in new capital commitments, with a prominent, unnamed university serving as its anchor investor.
The Atomic Model
Abraham refrains from detailing the specifics of Atomic’s financial structure, citing “proprietary aspects,” but clarifies that it operates more like a fund than a traditional holding company. This means investors acquire stakes in the studio itself rather than directly in individual startups.
Investor Confidence and Early Exits
The enthusiasm of Atomic’s investors, including Peter Thiel and Marc Andreessen, is readily apparent. Abraham and Dudum are both skilled communicators, as evidenced by interviews. The firm is also beginning to realize successful exits from its portfolio companies.
Hims: A Public Success
Hims, a telehealth company created by Atomic, went public in January through a special purpose acquisition company (SPAC), with a valuation of $1.6 billion. As of the current date, the company, led by Dudum who serves as both CEO of Hims and a general partner at Atomic, has a market capitalization of $2.9 billion.
Other Exits and Future Prospects
Atomic also sold TalkIQ, a voice-powered sales startup, to Dialpad in 2018 for a reported $50 million. TalkIQ had previously raised $22 million in funding. Abraham anticipates further exits, stating that numerous portfolio companies are poised for potential public offerings within the next year.
Promising Startups in the Portfolio
Replicant, an autonomous call center startup, is a promising prospect, having raised $35 million since its founding in 2017, including a $27 million Series A round led by Norwest Venture Partners. Homebound, a home-building company handling all aspects from financing to construction, has also gained traction, securing $53 million in investment.
Challenges and Lessons Learned
Not all of Atomic’s ventures have achieved success. Ever, a photo-sharing app, was discontinued after reports surfaced that user photos were used to train facial recognition technology. Rested, a sleep-tracking company, was also shut down. ZenReach, a Wi-Fi marketing company, experienced layoffs and a change in leadership.
Future Focus and Opportunities
Despite setbacks, Atomic continues to generate new ideas. Abraham identifies healthcare, finance, education, and real estate as areas ripe for innovation, noting the significant inefficiencies within these industries.
“You study them,” he explains, “and then you wonder: How is this possible this happened?”
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