Europe’s venture capital landscape, long a fertile ground for nascent ideas but often a desert for later-stage funding, is witnessing a significant shift.
London-based Notion Capital, an early pioneer in addressing this “follow-on gap”, has once again raised the stakes, announcing a new $130 million growth fund.
This isn’t merely a larger fund; it’s a strategic declaration, nearly doubling the size of its predecessor and signaling a concerted effort by European firms to cultivate their own champions on home soil.
For years, the narrative has been consistent: promising European startups would hit a ceiling, forced to either scale back ambitions or look across the Atlantic for the substantial growth capital needed to truly compete.
U.S. venture capitalists, once eager participants in European growth rounds, are increasingly turning their focus inward.
“That opens up an opportunity for European firms like ourselves to make up some of that difference and be real European champions,” asserts Stephen Chandler, Notion Capital’s managing partner.
It’s a call to arms, a recognition that the continent’s innovation deserves sustained, homegrown backing.
Notion Capital isn’t just reacting to a market void; it’s proactively shaping the future.
While their initial opportunities fund in 2017 was designed to support existing portfolio companies, this new Growth Opps III fund breaks new ground by actively seeking investments outside its established stable.
This broader mandate reflects a maturing ecosystem and Notion’s ambition to become a more ubiquitous force in European growth equity.
The firm’s investment thesis for this new vehicle is both timely and forward-looking.
Predictably, artificial intelligence sits at the core, but with a crucial distinction.
Notion eschews the capital-intensive infrastructure layer of large language models, instead focusing on the application layer, as highlighted in this Forbes article.
Chandler sees AI as a “super cycle causing a profound shift in the way that software is delivered and consumed,” and believes the application layer will “massively increase” the market’s size.
This calculated approach aims to capture value where AI directly impacts user experience and business processes, rather than the foundational technology itself.
Beyond AI, Notion is keenly eyeing sectors tied to the burgeoning demand for sovereignty – defense and supply chain logistics – reflecting broader geopolitical currents and Europe’s drive for strategic autonomy, as discussed here.
Traditional strengths like SaaS, cloud, and fintech remain, but will now be infused with an AI lens, augmented by these new, strategically vital verticals.
The fund is already deploying capital, a testament to its readiness.
Early deals include Upvest, a stock trading API from its early-stage portfolio, alongside external investments in Kraken, an Octopus Energy spin-off, and Nelly, a startup developing software and financial products for the medical sector.
This blend of internal and external deployment showcases the fund’s dual strategy in action.
To ensure “robust objectivity” in its expanded growth strategy, Notion has strategically bolstered its team.
Stephanie Opdam, an existing partner, will now drive this initiative, joined by Jessica “Jess” Bartos, formerly a principal at Salesforce Ventures. Bartos’s appointment is particularly noteworthy as Notion Capital’s first external partner hire, bringing fresh perspectives and growth-stage expertise.
“Because this was a new strategy, we felt we could benefit from external expertise at that growth stage,” Chandler explains, underscoring the firm’s commitment to building a diverse and specialized leadership for its new direction.
Despite its British origins, Notion Capital’s latest fund is a truly European endeavor, denominated in euros and based in Luxembourg.
This pragmatic approach highlights the firm’s continental ambition, transcending national borders in its pursuit of European champions.
The fund, which pushes Notion’s assets under management past the $1 billion mark, was raised through existing relationships with limited partners spanning continental Europe, the UK, MENA, and the U.S.
“Something like 85% of our money comes from institutions; and within that, we’re very well geographically dispersed,” Chandler notes, illustrating the firm’s broad appeal.
The wider European LP landscape, historically slow to embrace venture capital, is showing nascent signs of change. Initiatives like France’s Tibi and the UK’s Mansion House Accord are designed to mobilize long-term institutional capital into the asset class.
While Chandler acknowledges these weren’t a “feature in this fund,” he remains optimistic: “the signs are extremely positive, and that’s great [for] addressing that fundamental problem we started with, in terms of some of the gaps in growth capital we have in Europe.”
This future influx of capital, if it materializes, could introduce more competition for Notion, particularly at the growth stage where it is less established than in its early-stage roots.
Yet, Notion Capital believes it possesses a unique competitive advantage.
Chandler views the early and growth stages not as separate silos but as a continuum.
“Our real competitive advantage in this growth strategy is leveraging the reach that we have in our early stage strategy,” he explains.
Unlike many growth funds that must source opportunities from scratch, Notion has cultivated deep, long-standing relationships with founders through its active platform team and 150+ startup investments.
This extensive network, including successes like Currencycloud, GoCardless, and Mews, provides an unparalleled pipeline and credibility, making external companies more inclined to accept Notion’s growth checks, even as Europe’s capital markets mature.
In essence, Notion Capital’s new fund is more than just a financial vehicle; it’s a confident assertion of European self-reliance in the global innovation race.
By strategically targeting critical sectors, expanding its investment scope, and leveraging its established network, Notion is positioning itself not just to fill a capital gap, but to actively build the next generation of European tech giants.
The continent’s future champions may very well find their wings with Notion’s backing.
