Notion Capital IV holds first close on £75m

The fund was registered in May 2019, though Notion managing partner Stephen Chandler told Unquote the firm had been informally speaking with LPs about the fundraise since the fourth quarter of 2018. Notion Capital IV is structured as a UK limited partnership.

Management fees are 2.25% with a 20% carry rate and a 5% kicker should the fund achieve net returns above 4x. Osborne Clarke acted as legal adviser for the fundraise.

The fund has a target of £125m and a hard-cap of £175m. Its predecessor, Notion Capital III, closed on $140m in 2017, below its target of $150m. The third-generation vehicle is currently 70% deployed and Chandler told Unquote it is currently tracking in excess of 30% net IRR.

The firm has also announced its intention to launch a second growth opportunities fund in 2020. The firm’s first growth opportunities fund, Notion Capital Opportunities, held a first close on $80m in 2017 and provides equity for the highest-performing companies in Notion’s portfolio.

Investors
The fund has a total of 15 LPs at first close, which the firm expects to rise to 25 at final close. LPs include BPC and US-based investors Texas A&M University Endowment and S-Cubed Capital. Private investors including the founders of MoneySupermarket, Moonpig, Ocado, Play.com, Tag and FeelUnique also invested.

British Business Investments, Key Capital and Pentland Group are also LPs, according to Unquote Data.

The EIF performed due diligence on the fund but did not invest, citing Brexit as a reason.

Investments
The fund has already closed one investment and has two investments in the pipeline.

The firm will continue its strategy of investing in B2B software-as-a-service companies with its fourth-generation vehicle. The fund will focus on companies in the financial services, healthcare, insurance, agriculture and legal sectors with annual recurring revenues of more than €1m.

Chandler expects the fund will make 20 investments with an expected holding period of seven years on average, and of up to 10 years.

Notion Capital IV will write initial equity cheques of €1-8m and will avoid seed and early-stage rounds.

Notion expects to invest 50% of the raised capital in UK companies and the rest in other European companies.

People
Notion Capital – Stephen Chandler (managing partner).

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