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Notion Capital outs new $80M ‘growth equity’ fund to invest in enterprise Saas and cloud portfolio



Notion Capital, the London-based VC focussed on enterprise SaaS and cloud startups, is announcing a number of updates today. This includes a new later-stage follow-on fund for existing portfolio companies, and the final closing of its third early-stage fund, which now counts Cisco amongst a number of new U.S-based LPs. The firm has also made two internal promotions, with both Chrys Chrysanthou and Patrick Norris making the step up to Partner.

Dubbed “Notion Capital Opportunities LP,” the new growth equity fund is targeting a final close of $80 million and will be used by Notion to do later-stage investments — think Series C and beyond — in the best performing companies in its current portfolio, and in a way that would not be possible by simply following on out of its existing funds. I understand Notion has already raised 55 per cent of the new fund’s target size, whilst the thinking behind the follow-on vehicle is to “augment investment returns” and position the firm as an even more attractive and long-term funding partner for the companies and founders it backs.

Notion is also communicating the final close of “Notional Capital III LP,” its third early-stage fund at $140 million, $120 million of which had previously been announced. Notably, new LPs include Cisco Investments, the venture capital arm of Silicon Valley tech giant Cisco, as well as two U.S. university endowments Emory and Texas A&M. Ireland’s Key Capital has also invested in the fund.

In a call, Notion Capital Managing Partner Stephen Chandler said the fact that the VC has pulled in U.S.-based LPs for the final closing of fund three is a reflection of the growing interest across the pond in European tech startups. This, he said, was in stark contrast to the state of play back in 2009 when Notion Capital was first started by himself and the two founders of MessageLabs, after it sold for $700 million to Symantec a year earlier.

Asked about the trouble other U.K. funds are reportedly having closing, because of uncertainty now that Brexit’s Article 50 has been triggered and in relation to Europe’s largest LP, the partly European tax-payer funded European Investment Fund (EIF), Chandler says that this was something he took into account when actively courting U.S. investors.

Put simply, given Brexit, he wanted Notion to diversify its LPs away from being so reliant on the EU, and says U.S. LPs now make up 20 per cent of Notion Capital III’s final closing. Investors in the U.K., including the state-backed British Business Bank accounts for 25 per cent, Middle East investors account for 25 per cent, and EU investors, such as the EIF and various European family offices, make up the remaining 30 per cent.

Meanwhile, Chandler says the promotion of Chrysanthou and Norris to full Partner roles is a sign that Notion itself is maturing along with its in-house talent. Specifically, it signals that the firm has moved beyond simply being known as the European Saas fund founded by ex-MessageLabs operators and owners.

“These developments leave us exceptionally well positioned for 2017 and beyond, so we feel excited about what the future holds for Notion,” he adds in a statement. “From the start we set out to build a genuinely differentiated venture capital firm that would be sustainable across multiple generations. Talent is obviously critical to that mission so it is particularly pleasing to recognise the contribution of our two new partners with these internal promotions.”



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