Notion hits €300M for its fifth fund, but is unimpressed by big rounds into Generative AI startups

When it first appeared on the scene round ten years in the past, Notion Capital was poised to benefit from the oft-repeated phrase, “Software is eating the world.” In explicit, it was aiming at what was then referred to as the enterprise SaaS area. Several years on, and it’s capitalised on that thesis, investing in in additional than 100 early-stage corporations.

It’s now coming into its subsequent part, having accomplished the ultimate shut of its new €300 million ($325.6m) fund, its fifth, which closed at its ‘hard cap’.

The proof of the pudding is within the consuming, and Notion’s software program portfolio has definitely been ‘eating’ a whole lot of the world.

It’s invested into CurrencyCloud, GoCardless, Paddle and Yulife within the UK, HeyJobs and Upvest in Germany, Mews within the Czech Republic, Cobee in Spain, TestGorilla within the Netherlands, Unbabel in Portugal and Workable in Greece.

Fund Five has additionally already invested in Bound, DataOps, M3ter and Resistant AI, and the VC fund expects to make round 20 core Series A+ investments in whole from this fund.

Plus, there’s a distinction, maybe pushed by Brexit. This “Notion V” fund is Euro denominated and Luxembourg-based, which means it’s going to have an more and more pan-European focus for investments.

 

The agency additionally introduced three senior promotions. Partner Itxaso del Palacio turns into General Partner and Stephanie Opdam and Kamil Mieczakowski will transfer to Partner.

Del Palacio joined Notion in 2018 from M12 (Microsoft Ventures) the place she was an Investment Partner, and since becoming a member of has led investments in Bound, Cledara, Cobee and Yulife, amongst others.

Opdam and Mieczakowski additionally joined in 2018 and have led investments in DataOps and Resistant AI.

But Stephen Chandler, Managing Partner at Notion Capital, believes the phrase “Entperprise SaaS” is not match for goal.

He informed me: “We used to really use the word SAS exclusively for the focus, but, you know, to be honest, our focus for a while has been broader than that. SaaS has evolved beyond the application layer into infrastructure, hybrid, cloud, edge computing, all of those kinds of things. But also different monetization models. It’s no longer just a case of subscription software. We’re seeing people taking a share of payments, having other embedded finance propositions, marketplaces. All of those things sit within the Notion wheelhouse. We tend to use the phrase ‘business software’ now, even though sometimes I think that’s a bit boring.”

He added that “the strategy remains very much the same. We continue to focus at Series A, where our sweet spot is.”

He stated Notion may even put small checks into pre-seed corporations “We will literally go as low as 50,000 euros into company. And then we will also come in on growth stage opportunities.”

Does he see a chance with Generative AI?: “Where we see the opportunity within our kind of remit is more a verticalized play. In particular, where a company has proprietary data that it can leverage. We see some really interesting companies emerging from that. And also some threats I’m sure as well.”

He additionally criticised buyers who had gone big into AI startups when a lot of the sector is unproven, and singled out the current $105 million funding into Mistral: “I think there’s been a tonne of hype and when I start seeing companies doing $100 million pre-seed raises I find it a little concerning, to be honest. You sit and look at the names of the people that have invested and you think, well, actually, even if the company really nails it, you’re never gonna make any money and that really?”

He thinks the “horizontal play” of Generative AI is way more the purview of Big Tech: “I think it’s going to be the big guys that lead and I also think it’s going to commoditize quite quickly.”

Notion may even provide a 3rd Opportunities Fund in 2024, placing further development follow-on capital into the agency’s finest performing enterprise belongings and different development stage enterprise software program corporations in Europe.

Investors within the new fund embody Cortes Capital LLC, KfW Capital, and TNO. Returning LPs included: British Patient Capital, Novo Holdings and RSJ.