The lack of growth capital in Europe is such a persisting issue that some early-stage firms have taken the matter into their own hands. London-headquartered firm Notion Capital is one of them.
In 2017, Notion Capital was one of the first in Europe to close an opportunities fund to provide its portfolio companies with follow-on capital. Now, it has closed a $130 million growth fund, nearly twice the size of its previous one, that will also invest outside of its portfolio, TechCrunch learned exclusively.
U.S. VCs that used to fill the growth capital gap currently tend to focus more on their own market, said managing partner Stephen Chandler, noting that “opens up an opportunity for European firms like ourselves to make up some of that difference and be real European champions.”
Some of the European companies Notion intends to “champion” from its new Growth Opps III fund are tied to the growing demand for more sovereignty, including those specializing in defense and supply chain logistics. But like many, the VC firm is also drawn to AI, which Chandler sees as a super cycle causing “a profound shift in the way that software is delivered and consumed.”
Notion Capital won’t invest in the infrastructure layer such as large language models. Instead, the firm sees opportunities in the application layer that will “massively increase” the size of its market, Chandler said. While Notion’s flagship fund has historically been known for its strong penchant for SaaS, cloud, and fintech, these will now be AI-infused, and joined by new verticals.
The firm expects to make a dozen investments and has already started deploying its capital from the funds. Deals, to date, include Upvest, a stock trading API out of its early-stage portfolio, as well as external companies Octopus Energy spinoff Kraken, and Nelly, a startup that builds software and financial products for …