Notion Capital Raises $130M Growth Fund to Champion European Tech Firms and Expand Investment in AI and Sovereignty-Focused Startups

Notion Capital, a London-based venture firm, has recently closed a $130 million growth fund, almost double the size of its previous one. This new fund will not only invest in portfolio companies but also extend investments outside of it.

The move comes amidst growing demand for European firms to fill the gap left by U.S. VCs focusing more on their domestic market. Stephen Chandler, Notion Capital’s managing partner, emphasized this shift as an opportunity for European firms like Notion Capital to emerge as significant players in Europe.

Some sectors that Notion Capital plans to invest in include defense, supply chain logistics, and artificial intelligence (AI). Chandler views AI as a ‘super cycle’ driving a profound shift in the delivery and consumption of software. However, the firm will not invest in infrastructure like large language models but rather focus on the application layer, which they believe will significantly expand their market.

Notion Capital expects to make around a dozen investments from this new fund and has already started deploying capital. Deals include Upvest, a stock trading API from its early-stage portfolio, as well as external companies like Kraken (an Octopus Energy spinoff) and Nelly (a medical sector startup).

To ensure robust objectivity, follow-on deals will be managed by dedicated growth fund partners who will also source growth stage opportunities beyond the portfolio. Stephanie Opdam, an existing Notion Capital partner, and Jessica “Jess” Bartos, previously a principal at Salesforce Ventures, will drive this growth strategy.

Notion Capital’s latest fund is denominated in euros and based in Luxembourg, demonstrating its commitment to Europe. The firm raised this new vehicle with relationships from across continental Europe, the U.K., MENA, and the U.S., bringing its assets under management to over $1 billion.

While initiatives to mobilize long-term institutional capital were not a significant feature in this fund, changes in several countries, such as France’s Tibi initiative and the U.K.’s Mansion House Accord, suggest that future growth funds may be easier to raise.

Despite the potential increase in competition due to more LPs participating in growth stage investing, Notion Capital believes its competitive advantage lies in leveraging the reach it has built through its early-stage strategy. The firm’s extensive network with founders, including through its active platform team, and flexibility in check size, set it apart from many growth funds.

The firm’s broadened scope does not diminish the value of its portfolio, which includes over 150 startups since inception, such as Currencycloud, GoCardless, Mews, Paddle, and Quantum Systems. While some companies are pre-AI or have been exited, the remaining ones likely hold future champions, bolstering Notion Capital’s reputation and attractiveness to external companies seeking growth capital.