The lack of growth capital in Europe is a very persistent issue, with some early stage companies putting the issue in their hands. One of these is the conceptual capital of the London-based company.
In 2017, Notion Capital was one of the first in Europe to close the Opportunity Fund to provide portfolio companies with subsequent capital. It currently closes its $130 million growth fund, almost twice its previous one, and plans to invest in anything other than its portfolio, TechCrunch has learned exclusively.
Managing Partner Stephen Chandler said that US VCs, which were currently being used to fill the growth capital gap, are now more likely to focus on their markets, “opening up opportunities for European companies like us to make up for that difference and become real European champions.”
Some of the concepts of European companies are intended to “champ” a “champion” from the new growth OPPS III fund. But like many, VC companies are also attracted to AI, and Chandler sees it as a supercycle that causes “a deep change in the way software is delivered and consumed.”
Concept capital does not invest in infrastructure layers such as large language models. Instead, the company sees the application layer opportunity and “significantly increases” the size of the market, Chandler said. Notion's flagship funds were historically known for their strong leanings on Saas, Cloud and Fintech, but these are now becoming more and more AI-inspired and new industries are added.
The company expects to make dozens of investments and has already begun capital deployment from funds. Previous transactions include stock trading APIs from early stage portfolios, as well as external company Octopus Energy Spinoff Kraken and Nelly, a startup building software and financial products for the health sector.
In Chandler's words, subsequent transactions are made by dedicated growth fund partners “procuring and procuring opportunities for outings and growth stages outside of portfolio” to provide “robust objectivity.”
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One of them is Stephanie Opdam (left of the photo), a capital partner of existing concepts. She will drive this growth strategy along with Jessica “Jess” Bartos, former principal of Salesforce Ventures. A US citizen, Bartos is also the first external partner employment for Concept Capital (previous partners were promoted internally).
“It was a new strategy and I felt I could benefit from external expertise at that stage of growth,” Chandler said.
It may also be easier to raise subsequent growth funds. Europe is struggling with a shortage of pension funds investing in venture capital companies, but incentives have begun to change in several countries, including the UK, with Tiby initiatives, including France and Mansion House Accord.
Despite its British roots, conceptual capital does not rely solely on the UK regulatory framework. This latest growth OPPS III fund is based in the Euro and Luxembourg.
To manage this new vehicle, they raised its assets to more than $1 billion under management.
“What's like 85% of our money comes from institutions, and in that, we're geographically dispersed,” Chandler said.
However, recent initiatives to mobilize long-term institutional capital are[weren’t] It really is a distinctive feature of this fund,” he added. [for] We are addressing the fundamental issues that we have begun in terms of some of the growth capital gaps in Europe. ”
“If this ultimately doesn't work and LPS increases, if you take part in investments in the growth stage, this could lead to more competition for conceptual capital. At least in the growth stage, it's less established than in the early stage. However, Chandler considers both to be a continuum.
“Our real competitive advantage in this growth strategy is to leverage reach in early stage strategies,” Chandler said. “Most growth funds don't have that. They're trying to raise everything in the growth stage when they put their heads on the balustrade in terms of scale and momentum.”
In contrast, Notion Capital said it has many touchpoints with its founders over the years, including a highly active platform team, and is flexible in terms of check size.
Despite the expansion of scope, growth OPPS III's key assets undoubtedly remain the conceptual capital portfolio. The company has invested in over 150 startups since its founding, including CurrencyCloud, Gocardless, Mews, Paddle and Quantum Systems. Some have come forward, but the rest of the companies may include future champions. This is a track record that outside companies should be willing to make growth checks more enthusiastic, even if there is little growth capital in Europe.