Atlas Venture, one of the best-regarded venture capital firms in Europe, will close its two offices on the US west coast and cut staff in Paris, Munich and London after slashing its fund from $970m (€940m) to $600m.

The firm now acknowledges that there is too much money chasing too few opportunities in the early-stage investment sector. Christopher Spray, a senior principal at Atlas Venture, said: "There will continue to be opportunities for attractive venture capital returns as corporate capital spending on technology recovers, but only once the current overhang of venture capital is removed from the market."