Notion Capital Secures $130M Growth Fund to Address Europe’s Follow-On Investment Gap
The persistent challenge of securing growth capital in Europe has prompted some early-stage firms to take proactive measures. Among them is Notion Capital, a London-based venture capital firm that has recently launched a $130 million growth fund, nearly double the size of its previous fund. This new initiative aims to not only support its existing portfolio companies but also to invest in promising startups outside its current holdings, addressing the growing demand for capital in the European market.
Notion Capital’s Strategic Move
In 2017, Notion Capital became one of the pioneers in Europe by establishing an opportunities fund designed to provide follow-on capital to its portfolio companies. The firm’s latest endeavor, the Growth Opps III fund, marks a significant expansion of its investment capabilities. Managing partner Stephen Chandler highlighted that U.S. venture capitalists, who traditionally filled the growth capital gap in Europe, are now focusing more on their domestic market. This shift creates an opportunity for European firms like Notion Capital to step in and become champions for local startups.
The Growth Opps III fund is particularly focused on sectors that are gaining traction due to increased demand for sovereignty, such as defense and supply chain logistics. Additionally, Notion Capital is keenly interested in artificial intelligence, which Chandler describes as a transformative force in software delivery and consumption. The firm plans to concentrate on the application layer of AI, steering clear of investments in foundational technologies like large language models. This strategy aligns with Notion’s historical strengths in software as a service (SaaS), cloud computing, and fintech, now enhanced with AI-driven innovations.
Investment Strategy and Early Deals
Notion Capital aims to make approximately a dozen investments through its new fund, with capital deployment already underway. Initial deals include Upvest, a stock trading API from its early-stage portfolio, and external companies like Kraken, an offshoot of Octopus Energy, and Nelly, a startup focused on software and financial products for the healthcare sector. To ensure a robust and objective investment approach, Notion has appointed dedicated growth fund partners who will not only manage follow-on investments but also seek out new growth-stage opportunities beyond the existing portfolio.
This strategic shift is underscored by the hiring of Jessica “Jess” Bartos, a former principal at Salesforce Ventures, as Notion Capital’s first external partner. Chandler emphasized the importance of bringing in external expertise to drive this new growth strategy, which reflects the firm’s commitment to adapting to the evolving investment landscape.
Challenges and Opportunities in European Venture Capital
Despite its British origins, Notion Capital’s latest fund is denominated in euros and based in Luxembourg, allowing it to tap into a broader European investor base. The firm has successfully raised over $1 billion in assets under management, primarily through established relationships with limited partners across Europe, the U.K., the Middle East and North Africa (MENA), and the U.S. Chandler noted that approximately 85% of their funding comes from institutional investors, showcasing a geographically diverse funding strategy.
While recent initiatives aimed at mobilizing long-term institutional capital in Europe have not significantly impacted this fund, Chandler remains optimistic about the future. He believes that as more limited partners engage in growth-stage investing, competition will increase, particularly in a segment where Notion Capital is less established compared to its early-stage investments. However, Chandler views early and growth-stage investments as interconnected, leveraging the firm’s extensive network and experience with founders over the years.
A Promising Future for Growth Opps III
The core strength of the Growth Opps III fund lies in Notion Capital’s existing portfolio, which includes over 150 startups since its inception. Notable investments include Currencycloud, GoCardless, Mews, Paddle, and Quantum Systems. While some of these companies predate the AI boom or have already exited, many remain poised for future success. This established track record is expected to enhance Notion Capital’s appeal to external companies seeking growth capital, even as the landscape for venture funding in Europe evolves.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
