The lack of growth capital in Europe is such a persisting issue that some early-stage firms have taken the matter into their own hands. London-headquartered firm Notion Capital is one of them.

In 2017, Notion Capital was one of the first in Europe to close an opportunities fund to provide its portfolio companies with follow-on capital. Now, it has closed a $130 million growth fund, nearly twice the size of its previous one, that will also invest outside of its portfolio, TechCrunch learned exclusively.

U.S. VCs that used to fill the growth capital gap currently tend to focus more on their own market, said managing partner Stephen Chandler, noting that “opens up an opportunity for European firms like ourselves to make up some of that difference and be real European champions.” 

Some of the European companies Notion intends to “champion” from its new Growth Opps III fund are tied to the growing demand for more sovereignty, including those specializing in defense and supply chain logistics. But like many, the VC firm is also drawn to AI, which Chandler sees as a super cycle causing “a profound shift in the way that software is delivered and consumed.”

Notion Capital won’t invest in the infrastructure layer such as large language models. Instead, the firm sees opportunities in the application layer that will “massively increase” the size of its market, Chandler said. While Notion’s flagship fund has historically been known for its strong penchant for SaaS, cloud, and fintech, these will now be AI-infused, and joined by new verticals.

The firm expects to make a dozen investments and has already started deploying its capital from the funds. Deals, to date, include Upvest, a stock trading API out of its early-stage portfolio, as well as external companies Octopus Energy spinoff Kraken, and Nelly, a startup that builds software and financial products for the medical sector, according to Notion Capital.

To give itself some “robust objectivity,” in Chandler’s words, follow-on deals will be conducted by dedicated growth fund partners who will also “go out and source growth stage opportunities outside of the portfolio.”

One of them is existing Notion Capital partner Stephanie Opdam (on the left of the picture). She will now drive this growth strategy alongside Jessica “Jess” Bartos, formerly a principal at Salesforce Ventures. A U.S. national, Bartos is also Notion Capital’s first external partner hire (previous partners were promoted internally.)

“Because this was a new strategy, we felt we could benefit from external expertise at that growth stage,” Chandler said.

Subsequent growth funds may also be easier to raise. While Europe has suffered from a lack of pension funds investing in venture capital firms, incentives have started to change in several countries, including France with the Tibi initiative and the U.K. with the Mansion House Accord.

Despite its British roots, Notion Capital isn’t solely dependent on the U.K.’s regulatory framework; this latest Growth Opps III fund is denominated in euros and Luxembourg-based. 

To raise this new vehicle, which brings its assets under management to over $1 billion, the firm relied on its existing relationships with limited partners from across continental Europe, the U.K., MENA and the U.S.

“Something like 85% of our money comes from institutions; and within that, we’re very well geographically dispersed,” Chandler said.

But while recent initiatives to mobilize long-term institutional capital  “[weren’t] really a feature in this fund,” he added, “the signs are extremely positive, and that’s great [for] addressing that fundamental problem we started with, in terms of some of the gaps in growth capital we have in Europe.”

“If this finally works out and more LPs participate in growth stage investing, this could translate into more competition for Notion Capital. At least at the growth stage, where it is less established than at the early stage. However, Chandler sees both as a continuum.

“Our real competitive advantage in this growth strategy is leveraging the reach that we have in our early stage strategy,” Chandler said. “Most growth funds don’t have that. They’re out there trying to do all of their sourcing at the growth stage once they put their head above the parapet in terms of scale and momentum.”

In contrast, he said, Notion Capital has many touch points with founders over the years, including through its very active platform team, and is flexible in terms of its check size.

Despite its expanded scope, Growth Opps III’s main asset arguably remains Notion Capital’s portfolio. The firm has invested in more than 150 startups since its inception, including Currencycloud, GoCardless, Mews, Paddle, and Quantum Systems. While some are pre-AI or have been exited, the remaining companies likely include future champions — a track record that should make external companies more willing to take their growth checks, even if growth capital becomes less scarce in Europe.

Two years after securing $1 billion in commitments from over 20 countries, the NATO Innovation Fund (NIF) is entering a new chapter, marked by the arrival of two new partners and the departure of its penultimate founding team partner.

In a context of increased military spending across NATO members, investment in dual-use technology has skyrocketed since the initiative was first announced in 2021. Once a no-go-zone for institutional investors, defense and resilience tech last reached an all-time high of 10% of all VC funding in Europe, where nearly all NIF’s backers are located.

This booming interest should have given NIF a first-mover advantage, but the fund was hampered by management challenges and a series of high-profile departures. After the 2025 NATO Summit in The Hague reaffirmed its importance last June, NIF is now emerging with an almost entirely new investment team. It is composed of three partners.

While NIF originally had four partners and one managing partner, a person familiar with NIF said that this flat, three-partner model will be the structure in place for the foreseeable future, suggesting that no new hires are to be expected. These two appointments had previously been rumored, but the identities of the new partners had not been confirmed.

Two of the partners are new hires: Ulrich Quay and Sander Verbrugge, who will be based in Amsterdam. Quay, a German national, was most recently in charge of corporate investments as a vice president at BMW, where he previously founded and led corporate venture fund BMW i Ventures. Verbrugge, a Dutch PhD in molecular biophysics, was previously a partner at deep tech VC fund Innovation Industries, which he joined after working at semiconductor design and manufacturing company NXP. The third partner is London-based VC Patrick Schneider-Sikorsky, now the last remaining member of the original investment team. Alongside the new hires, the fund announced the departure of founding team partner Kelly Chen, who confirmed to TechCrunch that it was her decision and that she will be stepping away to build a new venture. Chris O’Connor, another founding team partner, departed earlier this year with similar plans.

Chen currently sits on the board of several startups backed by NIF, but will transition her board responsibilities once her employment at the NIF has wrapped up, TechCrunch learned from its chief communications and marketing officer, Amalia Kontesi. 

While some observers wish the fund had deployed capital faster, she said NIF “is on track to meet [its] investing goals for the year.” Since its inception, NIF has made 19 investments: seven into funds such as OTB Ventures, and 12 into startups including Space Forge and Tekever, which makes dual-use drones.

Still, adding new partners with industrial and scientific backgrounds, no matter how impressive, may not satisfy those who wish that the fund could invest in Ukraine or pure defense, as opposed to dual use, in response to Russia’s war economy. But it is also in line with NIF’s broader thesis to “empower deep tech founders to address challenges in defence, security, and resilience.”

However, NIF has also ramped up its efforts on the defense side. Its team was heavily involved in the development of NATO’s Rapid Adoption Action Plan, aimed at accelerating the adoption and integration of new technological products for defense. NIF has also been building up its Mission Platform Group with strategic hires including John Ridge, who was hired as chief adoption officer in 2024 to help portfolio startups navigate military procurement.

As for its new partners, they were once again hired through a process previously described by VC Michael Jackson as akin to “building a boy band” — identified by NIF’s board of directors and approved by LPs, rather than having teamed up based on shared history or chemistry. 

This may be inevitable for an organization that now counts 24 countries as limited partners, but was often pointed as one reason the previous team didn’t gel. This time, all three partners got to meet throughout the recruitment process and spend time together since then to “ensure a smooth transition and to position the team for long term success,” Kontesi said.

In a statement shared exclusively with TechCrunch, NIF’s vice chair, professor Fiona Murray, compared the organization to a startup. “We are proud of what we accomplished but like any effective team we are learning, experimenting, improving:  speeding up our processes, expanding our platform support for startups, doubling down on ecosystem building and more broadly recognizing the need to build the sector and the capital stack.” 

Murray expressed pride in having brought together a qualified team that can collaborate effectively, creatively and quickly. “They will enable us to move even more rapidly and decisively to drive the Alliance’s technological agenda and support the best founders across European ecosystems,” she previously wrote in a joint statement with NIF’s chair, Klaus Hommels. 

Hommels’ other activities as an investor have prompted questions about possible conflicts of interest, but no change appears to have been made to his role during NIF’s recent LP meeting in Venice. Rather than dwelling further on its reorganization, NIF seems set on helping NATO become more resilient. “In this next phase,” NIF’s vice chair said, “you’ll see us refocus on DSR opportunities and emphasize building companies that can drive industrial scale and really support ecosystems across Europe.”

While funding may be scarce for some, Europe’s fastest-growing startups still have their pick.

The latest beneficiary of that investor appetite is Finom, a five-year-old, Amsterdam-based challenger bank that targets small and medium-size businesses across Europe. The company, which claims to have doubled its revenue in 2024, just closed a €115 million Series C equity round (around $133 million), TechCrunch learned exclusively. This comes only a few weeks after it landed $105 million in growth funding from General Catalyst, its backer since 2021.

Finom’s business model centers on providing European SMBs with a financial platform that combines banking, invoicing, and a growing range of features, including AI-enabled accounting. “Because theoretically, entrepreneurs don’t need to have an accountant at all,” said CEO Andrey Petrov (on the far left in the picture).

The startup’s ambitious growth targets reflect this vision. While Petrov says Finom’s goal of having one million business customers by the end of 2026 is motivational and not set in stone, its new funding makes that target slightly more attainable.

This belief that Finom could serve a fair share of Europe’s 26 million SMBs is also reflected in its Series C. The round was led by AVP (formerly AXA Venture Partners), with participation from new investor Headline (formerly e.ventures) through Headline Growth. Existing investors Cogito Capital, General Catalyst, and Northzone also joined the round.

Despite this momentum, the startup may find it easier to win clients over from legacy banks  — its current plan — than from other fintechs.

Even after its Series C brought its total funding to roughly $346 million, Finom has far less external capital than Monzo, N26, Revolut, or Wise, which all raised more than $1 billion. Its funding to date is more comparable to the approximately $700 million raised by Finom’s closest peer, French unicorn Qonto — though the comparison isn’t perfect.

What makes Finom’s funding structure particularly interesting is its non-traditional component. Unlike typical VCs, General Catalyst took no equity in Finom with its non-traditional round; the capital from its Customer Value Fund (CVF) can only be used for growth, which is how it plans to get its money back. 

Combined with the Series B, this non-traditional funding round would have been enough for the Dutch company to reach profitability, according to chairman and co-founder Kos Stiskin (on the far right in the picture). But Finom was also hoping to raise equity by the end of the year, and get a “good and nice” new valuation in the process. What it didn’t anticipate was closing both deals so close to each other.

“One took longer than expected, and one was much faster than expected,” Stiskin told TechCrunch. He declined to disclose the updated valuation, stating only that it is twice the (also undisclosed) valuation associated with its 2024 $54 million Series B.

The timing may have worked in Finom’s favor. Since the company doesn’t publicize its unit economics — apart from its user base of 125,000 — the fact that General Catalyst took a look under the hood likely helped boost interest and speed up the funding. That vote of confidence — and its direct interest in recouping its money — may have been the signal that got investors to hurry up and write checks.

Beyond the signaling effects, getting the Customer Value Fund to finance Finom’s marketing efforts without giving up equity may seem like a good deal for its Series C backers — which include General Catalyst itself.

However, the Series C will also fund riskier efforts than customer acquisition through marketing. 

According to Petrov, one of its uses could be strategic, opportunistic acquisitions that would allow it to expand either its customer base or its product portfolio. That represents a shift in strategy, given that Finom has only acquired one company so far — in 2022, when it purchased Kapaga, a British cross-border payment service when Finom was considering expanding into the U.K.

Since then, Finom has shifted its focus to some of Europe’s largest markets, where it sees greater opportunity than in the U.K. The company believes these markets have fewer challenger banks competing for SMBs and that traditional banks are doing a poor job serving small businesses.

Like many neobanks, however, it only operates with an electronic money institution (EMI) license in most of its main markets: the Netherlands, France, Italy, and Spain (though not Germany, where it partnered with Solaris, which has a full banking license).

Despite these licensing limitations, it was able to add lending in the Netherlands, which it sees as a testing ground for its credit offering — something Petrov sees as a must-have for any fintech and for business customers. 

This lending initiative is also in line with Finom’s efforts to expand its product line both horizontally — with deposits and loans — and vertically, “starting from a banking account and ending in paying taxes, reports, and everything.” AI is involved as well, and not just on the product side. 

The company is also leveraging AI internally. With a team of 500, it expects to make some business- and tech-related hires, though not so much to scale its operations. “We’re adding some people, but mostly we’re adding new types of AI agents to work with internally,” Petrov said. “So we are hiring less than we need, and we see good output in terms of using AI and AI agents to automate part of [our] routine tasks.”

Finom’s leadership structure has also evolved. The split of duties between Finom’s four co-founders has gone through some changes over the years, with Petrov now the sole CEO — a role he once shared with Yakov Novikov, who is now an advisor alongside Oleg Laguta. 

The three of them previously created Russian digital bank Modulbank. But this time, Finom’s focus is on Europe and its entrepreneurs who are, in Stiskin’s words, “the backbone of the European Union economy.”