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London’s Top VCs: Notion Capital believe the disruption of the software industry by SaaS is the key to establishing itself as a major league VC

notionThis week Haggerston Times is looking at some of London’s top Venture Capital Firms, to help readers (and us!) gain a better understanding of what Venture Capital is all about and whether you and your company should be approaching them with your business plan (clue: you should, but find out which one first and try not to waste anyone’s time!).

So far we’ve looked at Google Ventures and Balderton Capital, 2 pretty serious players, even if Google Ventures in Europe are fairly embryonic (although we have discovered that the European arm of GV were credited as lead investors in a recent $60m funding round for music rights tech company Kobalt, although the US team supplied the quotes!).

Today we look at Notion, who exploded onto the scene when 2 brothers pulled off a “sale of the century” deal; and they are very much in the business of looking forward, not back. High growth, high octane software as a service specialists. We’re also very grateful for the (extremely prompt) feedback from Wayne Gibbins at Notion, which served to reinforce our view that Notion are right on top of their game.

About:

Notion Capital was founded in 2008 when brothers Ben and Jos White sold their business MessageLabs to Symantec for £397m, and decided to allocate £20m to developing a VC fund. The brothers had also founded RBR Networks and internet services provider Star Internet. Stephen Chandler and Ian Milbourn, senior executives at MessageLabs, and Chris Tottman, who worked for both companies, also followed the brothers to Notion as partners.

The fund was intended to bridge the funding gap for tech ventures in the UK, and introduce a more US centric approach to venture capital investment. The first fund has invested nearly $50m, and the second, launched in 2012, has raised around $125m, and received support from the European Union’s Competitiveness and Innovation Framework Programme and the European Investment Fund, the first time the two bodies had backed the same project.

Notion Capital invests exclusively in Software as a Service (SaaS) Companies, and almost exclusively in B2B enterprises, in Europe, primarily at the Series A stage, and generally between $1-3m. The firm will also invest smaller amounts typically through syndicate investment in seed rounds under $1m. Notion are active supporters of the European ecosystem working closely with accelerators like Seedcamp, Techstars, Startup Bootcamp, Startup Wiseguys & Entrepreneur First, and have also been heavily involved with the launch of SeedCloud, a European accelerator targeting Cloud Computing start-ups, through partner Stephen Chandler and in partnership with Hewlett Packard CTO Graham York.

notion fintech

Notion’s Fintech portfolio

The team believe that SaaS is the future of the Software industry, and that this makes the industry ripe for disruption, as SaaS is significantly differentiated from traditional Software companies with a stronger customer focus. Notion targets fast growth and believes that the software sector is where the strongest growth can be found, amongst “high margin companies with recurring revenues, fixed pricing and high customer retention”. Specific areas of focus whether SMB or Enterprise Software include PaaS and IaaS, Security & Content Management, Productivity & Collaboration, Big Data & Analytics, FinTech/Financial Services, Human Capital Management, Customer Management, eCommerce Enablement and Digital Marketing & AdTech

It goes without saying the team are entrepreneurial and highly experienced but not necessarily hands-on; they prefer to invest in teams with the talent to go-it-alone, acting like “a coach on the sidelines” who is there when you need them, however they expect to take a seat on the board of any company they complete a Series A round of funding with, maintaining regular contact with the founders.

The Team

Notion Capital are led by Managing Partner Stephen Chandler & Partners Jos White, who is now based in New York, Chris Tottman, and Ian Milbourn, who is also CFO, an accountant who qualified at Ernst and Young and has extensive experience of M&A. The partner team is supported by Wayne Gibbins and Patrick Norris (both Vice Presidents). Both work with the partners to cover ecosystem, deal origination, deal evaluation & due diligence. Wayne also handles marketing for the firm and Patrick supports cloud metrics and deal execution.

Clare Truscott is operations manager and Ben White, the European Technology Forum’s “Technology Entrepreneur of the Year” for 2005, Tobin Ireland and Jon Bradford are co-investors and advisors. Bradford is also MD at Techstars London and is a co-founder at f6s. The team recently hired Chrys Chrysanthou (formerly of Accel Partners, Amazon Web Services and Cisco) as an Executive-in-Residence and Adam Shepherd as an Associate and appear to be hiring more including an Associate focused on Platform)

notion team

The culture

Notion founder Ben White describes himself as “one of the best known technology entrepreneurs in the UK”, and we can think of no reason to doubt his assertion. Message Labs exit to Symantec was a truly breath-taking deal, and the story of how the brothers built RBR Networks despite having little initial knowledge of how the IT industry worked is also a lesson for any entrepreneur.

Fearlessness and boldness of execution are key to their approach, as is not being afraid to compete against and sell to some of the industry’s biggest players. One quote attributable to Ben perhaps sums up his approach to business: “Being an entrepreneur and true love are similarly unpredictable in their natures.” Or perhaps “Being an entrepreneur is like a boxer entering the ring. You’ve got to be ready. If you’ve got any doubts, you’re going to get found out.” Notion Capital are a punchy, brave, bunch of investors, and the approach has paid significant dividends.

Notion has grown quickly and consistently made investments throughout its lifetime, the number now stands at 30, 9 from the first fund and 21 from the second. From their impressive offices in West London, complete with board room, collaborative workspace and library (with fussball table), Notion have no trouble injecting passion and a sense of excitement into whatever business they are conducting. The investments, however, come first; Notion do not explicitly court publicity but most of their investee companies have been featured in major publications like Venturebeat and TechCrunch.

notion board room

Notion’s boardroom at its West London HQ

The Investments

Notion, alongside Balderton and Accel Partners, is the joint third most active VC in the UK, according to CB Insights. As mentioned, there have been 30 so far across the categories we have mentioned, including DueDil, one of the darlings of the investment community, Brightpearl, an integrated online accounting, CRM and stock mgmt. software, and Tradeshift, who completed a $75m fundraising last year, AdBrain, Glow, MoveGuides and more. There have been one or two significant exits to report; Star, which sold to Claranet for a reported £55m in 2012, and Shutl, sold to eBay for an undiscloed amount in 2013. There is also plenty of newsflow which suggests that investee companies are growing from strength to strength and leveraging the help and support Notion are bringing to the table, which suggests that further exits are not far away.

Notion are a lead investor at Seed and Series A stage but also follow investments at later stages such as New Voice Media, which has raised $105m in the last 2 years is already a well-established company backed by Salesforce.com, Highland Partners and others, DueDil is backed by Playfair Capital, Passion Capital and Sherry Coutu MBE and more and Currency Cloud, another portfolio highlight, is also backed by Atlas Venture, Anthemis Group and XAnge Private Equity. This would indicate that Notion are making the right deals and all of their portfolio companies fit the bill in terms of being disruptive SaaS businesses capable of outmanoeuvring on premise services in the medium to long term.

The future

The “can-do” attitude, the offices, the ambition and the target market are all here to stay, so we can say that the future looks bright for Notion capital. They are a VC firm that is “in the know” in their chosen field with a strong network and influential management team. If there was a question mark it would be around the lack of a really strong exit to a global player, but, since that is where founders Ben and Jos White’s greatest strength lies you would not bet against this happening in the not too distant future.

The firm may well need to bring more staff on board and they will need to be appropriately qualified, which may not be easy. Nothing about Venture Capital is easy however, and Notion, one of Europe’s biggest spenders, are all about “fast growth” and seem unlikely to lose their way, or pause for breath.

notion artwork

From our research (and we welcome any feedback), notion is not in the elite category of VCs; Google Ventures has made nearly 300 investments, for example, Balderton manages $2.3bn, but what Notion are is specialists in their chosen field, which, if their predictions about the scale of the disruption the software market will encounter over the next decade prove correct, might put them right up there. That certainly seems to be the ambition, but it is an almighty step and fraught with difficulty. Notion will doubtless enjoy the ride, and the experience of working alongside great founders and teams, whilst keeping the focus on its longer term goals.

The Twitter Verdict!

Bold, knowledgable, ambitious, and punchy, big spending Notion Capital bear the hallmarks of a major VC in waiting. Watch this space!

 

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