Notion Capital, a venture capital firm specializing in business software investments, has closed its fifth fund, garnering €300 million ($325.6 million) in commitments. The fund, called Notion V, was able to reach its hard cap and is denominated in Euros due to its pan-European focus. Notion Capital has already invested in over 100 early-stage companies, including CurrencyCloud, GoCardless, Paddle, and Yulife. With Fund Five, the firm expects to make around 20 core Series A+ investments.
The fund’s success can be attributed to its broader focus on business software rather than exclusively targeting enterprise SaaS. Stephen Chandler, Managing Partner at Notion Capital, explained that SaaS has evolved beyond applications to include infrastructure, hybrid, and cloud computing, as well as different monetization models. Notion Capital now refers to its focus as business software to better encompass these developments.
While Notion Capital remains focused on Series A investments, it also plans to provide smaller checks to pre-seed companies and participate in growth stage opportunities. Chandler expressed skepticism about the hype surrounding AI startups, cautioning against large investments in unproven sectors. He specifically mentioned the recent $105 million in funding for Mistral and questioned the return on investment for such large pre-seed raises.
Chandler believes that verticalized plays with proprietary data offer more promising opportunities within the AI space. He stated that Big Tech companies are better positioned to lead in horizontal plays, predicting that generative AI would quickly commoditize. Notion Capital also plans to launch a third Opportunities Fund in 2024 to provide additional growth follow-on capital.
The new fund received investments from Cortes Capital LLC, KfW Capital, and TNO, among others. Returning investors include Novo Holdings, British Patient Capital, and RSJ. With its latest fund, Notion Capital aims to continue supporting European business software companies and driving innovation in the industry.
