European Tech’s New Champion: How Notion Capital is Rewriting the Growth Stage Rulebook
For years, European startups have faced a frustrating reality: scaling beyond the initial seed and Series A rounds often meant chasing capital across the Atlantic. Now, a shift is underway. London-based Notion Capital has just closed a $130 million growth fund – nearly double its previous size – signaling a determined effort to fill the persistent growth capital gap in Europe, and more importantly, to do so on European terms.
The Transatlantic Shift and the Rise of European Champions
The traditional pipeline saw promising European companies seeking larger funding rounds from US venture capital firms. However, as US VCs increasingly focus on their domestic market, a significant opportunity has emerged for European firms to step up. “Opens up an opportunity for European firms like ourselves to make up some of that difference and be real European champions,” explains Notion Capital managing partner Stephen Chandler. This isn’t simply about filling a void; it’s about building a self-sustaining ecosystem where European innovation can flourish without being dependent on external forces.
Beyond Fintech and SaaS: New Verticals and the AI Inflection Point
Notion Capital’s historical strength lies in SaaS, cloud, and fintech investments. While these sectors remain core, the firm is strategically expanding into new verticals, heavily influenced by two key trends: the demand for strategic sovereignty and the explosive growth of Artificial Intelligence. Interestingly, Notion isn’t chasing the AI infrastructure race – the development of large language models – but rather the application layer. Chandler believes this is where the real market expansion lies, stating that AI will “massively increase” the size of the opportunity. This means backing companies building AI-powered solutions for existing industries, rather than building the foundational AI technology itself.
Specifically, the fund is targeting companies in areas like defense and supply chain logistics, reflecting a growing European focus on independence and resilience. Early investments already demonstrate this strategy, including Kraken, a spinoff from Octopus Energy, and Nellya, a medical software and financial products startup. These investments, alongside Upvesta, a stock trading API from their existing portfolio, showcase a diverse approach to growth stage funding.
The Importance of a Dedicated Growth Team
To ensure objectivity and access to a wider range of opportunities, Notion Capital has established a dedicated growth fund team, separate from its early-stage investment arm. This team, led by existing partner Stephanie Opam and new hire Jessica Bartos (formerly of Salesforce Ventures), will actively source deals outside of Notion’s existing portfolio. This is a crucial move, as Chandler acknowledges that growth-stage investing requires a different skillset and network than early-stage funding. Bringing in external expertise, like Bartos, is a testament to this commitment.
Institutional Investment and the Changing European Landscape
Raising a $130 million fund in the current economic climate is no small feat, particularly in Europe where institutional investment in venture capital has historically lagged behind the US. Notion Capital leveraged its existing relationships with limited partners (LPs) across Europe, the UK, MENA, and the US, with 85% of the capital coming from institutional investors. However, the landscape is shifting. Initiatives like France’s Tibi initiative and the UK’s Mansion House Accord are designed to incentivize pension funds and other institutions to allocate more capital to venture capital, potentially easing the funding squeeze for European startups. The Mansion House Accord outlines specific plans to unlock institutional investment.
Leveraging Early-Stage Relationships for Growth Stage Success
Notion Capital’s unique advantage isn’t just its new fund; it’s its established network of over 150 portfolio companies, including well-known names like Currencycloud, GoCardless, and Paddle. This provides a continuous pipeline of potential growth-stage investments that most dedicated growth funds simply don’t have. Chandler emphasizes that their “real competitive advantage…is leveraging the reach that we have in our early stage strategy.” This allows them to identify and support promising companies before they even hit the radar of larger, more specialized growth funds.
As more capital flows into the European growth stage, competition will inevitably increase. However, Notion Capital’s proactive approach, strategic focus on emerging verticals, and unique access to a robust portfolio position it well to thrive in this evolving landscape. The firm isn’t just reacting to the growth capital gap; it’s actively building a future where European startups have the resources they need to become global leaders.
What are your predictions for the future of European venture capital? Share your thoughts in the comments below!
