Europe's growth capital shortage just got a $130 million response. London-based Notion Capital has closed its largest growth fund yet, nearly doubling its previous vehicle to tackle the continent's persistent follow-on funding gap. The move signals a strategic shift as US VCs pull back from European growth deals, creating space for homegrown players to step up.
Notion Capital just made Europe's growth funding problem its opportunity. The London-based VC firm closed a $130 million growth fund that's nearly twice the size of its previous vehicle, positioning itself to fill the gap left by retreating US investors.
The timing couldn't be more strategic. "U.S. VCs that used to fill the growth capital gap currently tend to focus more on their own market," managing partner Stephen Chandler told TechCrunch exclusively. That shift "opens up an opportunity for European firms like ourselves to make up some of that difference and be real European champions."
Notion Capital has been playing the long game here. Back in 2017, it was among the first European firms to launch an opportunities fund for portfolio follow-ons. Now, with Growth Opps III, it's expanding beyond its own companies to chase external growth deals across the continent.
The fund's targets reflect Europe's shifting priorities. Defense and supply chain logistics companies are drawing attention amid growing sovereignty concerns, while AI remains the obvious magnet. But Notion isn't chasing infrastructure plays like large language models. Instead, Chandler sees the real opportunity in AI applications that will "massively increase" market sizes.
The firm's already deploying capital from the new fund. Recent deals include Upvest, a stock trading API from its early-stage portfolio, plus external bets on Octopus Energy spinoff Kraken and medical software startup Nelly.
To maintain "robust objectivity" on follow-on decisions, Notion brought in dedicated growth partners. Existing partner Stephanie Opdam will lead alongside Jessica Bartos, formerly of Salesforce Ventures and the firm's first external partner hire. "Because this was a new strategy, we felt we could benefit from external expertise at that growth stage," Chandler explained.
The fundraising environment is evolving in Notion's favor. European pension funds, historically absent from VC investing, are starting to change course thanks to initiatives like France's Tibi program and the UK's Mansion House Accord. While these didn't directly impact Growth Opps III, Chandler sees "extremely positive" signs for future fundraising.
Notion kept this fund Euro-denominated and Luxembourg-based, hedging against UK regulatory uncertainty. The $1 billion-plus AUM milestone came through existing LP relationships across continental Europe, the UK, MENA, and the US. "Something like 85% of our money comes from institutions, and within that, we're very well geographically dispersed," Chandler noted.
The growth stage presents both opportunity and risk for Notion. While it's established at early stages with over 150 portfolio companies including Currencycloud, GoCardless, and Paddle, growth investing means competing with specialized funds. But Chandler sees this as Notion's edge: "Our real competitive advantage in this growth strategy is leveraging the reach that we have in our early stage strategy. Most growth funds don't have that."
The firm expects to make about a dozen investments from Growth Opps III, focusing on AI-infused versions of its traditional SaaS, cloud, and fintech sweet spots plus new verticals. With European growth capital potentially becoming less scarce as institutional money mobilizes, Notion's betting its portfolio relationships and platform team will keep it ahead of pure-play growth funds scrambling for deal flow at scale.
Notion Capital's $130 million growth fund arrives as European venture capital faces a crucial moment. With US investors pulling back and European institutions slowly warming to VC, firms like Notion are positioning themselves as the homegrown champions their continent needs. The real test will be whether their early-stage relationships can translate into growth-stage wins as competition inevitably heats up.
