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Notion Capital unveils $120m investment fund for European cloud startups

Venture capital firm hopes to increase fund size to $150m by the time it reaches final close later this year

Notion Capital plans to invest more than $150m in European software-as-a-service (SaaS) startups, having secured $120m in time for the first close of its latest cloud fund.  

The London-based venture capital firm said it expects the fund’s value to exceed $150m at final close later in 2015, and plans to spend the money on supporting the growth of European business-to-business (B2B) SaaS providers.

According to Notion, the money has been contributed by a wide variety of investors, including governments, institutions and business leaders.

Notion was created in 2008 by MessageLabs founders Ben and Jos White, who sold the SaaS-based messaging security company to Symantec the same year for £397m.

This is the third such fund the company has run, the proceeds of which have largely been invested in B2B-focused cloud companies, such as communications software provider NewVoiceMedia and online invoicing firm Tradeshift.

Stephen Chandler, managing partner of Notion Capital, said in a blog post the company’s aim is to ensure European cloud companies garner the same attention from investors as their overseas counterparts.

“Globally, SaaS is becoming the new normal. Multibillion dollar markets, such as CRM [customer relationship management], have reached the inflection point where cloud-delivered software is the standard,” said Chandler.

“Yet, in many market segments, the transformation to SaaS is just getting started. In these areas, European founders are proving themselves every bit as able as their global counterparts in creating successful and thriving companies,” he said.

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However, despite around a quarter of global IT spending being paid out for European public cloud services, the continent’s providers typically receive just 5% of investor pay-outs, which Chandler said highlights the opportunities available.

“Notion is uniquely positioned in Europe to help these founders build category-leading businesses, leveraging both native European and international markets,” he said.  

In terms of the specific types of companies Notion is looking to invest in, Chandler said it’s interested in firms that are positioned to take advantage of the convergence of several industry mega-trends with cloud computing.

“The coming together of cloud computing with mobile computing, big data and machine intelligence – where these areas collide is where fireworks really happen,” he said.

“This is the future of business and enterprise software – an intelligent, data-driven, predictive world where software is augmenting human decisions and enhancing management, innovation and operations,” he added.

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