London-based venture capital firm Volution has launched a new $100M (nearly €88.13M) fund focused on fintech, AI, and SaaS businesses addressing productivity issues in capital markets and enterprise.
The fund was created in partnership with Japanese venture capital firm SBI Investment Co., Ltd., under a Co-GP arrangement. SBI Investment is the VC arm of SBI Holdings that manages assets exceeding $7B. It focuses on investments in fintech, deeptech, and IT services.
Volution’s second dedicated fund follows the success of its first, with many of its existing Limited Partners renewing their commitment to the new fund.
Tomoyuki Nii, Director, Executive Officer (Overseas Investment) SBI Investment Co., Ltd, says, “The UK is a global leader in fintech and AI, with world-class universities, a strong regulatory environment and a thriving entrepreneurial ecosystem. These strengths make it an attractive destination for investment.”
“Our cornerstone commitment to Volution comes at a time when Japan and the UK government are strengthening economic ties to drive growth across both markets. Building on the success of Volution’s first fund, it will provide a new funding option for fast-growing UK businesses looking to scale.”
What to expect from the new fund?
The UK technology sector is encountering funding challenges beyond early-stage investment, with Series A funding dropping by 44 per cent in 2024 compared to the previous year. Additionally, Series A to Series B conversion rates have decreased by over 50 per cent in the past five years.
Volution’s new fund aims to address this issue by supporting businesses with established revenue streams that need further capital for growth.
The fund also fosters collaboration between the UK and Japanese investors, creating an opportunity to lead in this space.
Volution has supported companies like Signal AI, Flagstone, and Cognism. Its first fund has achieved 300 per cent average revenue growth, with three exits, and includes one unicorn, Zopa Bank.
The new fund has begun deploying capital, with initial investments in a fintech and an AI business.
James Codling, Managing Partner at Volution, says, “The UK has a huge challenge at the moment. The Government is laser-focused on productivity and growth, but there is a fundamental structural funding challenge.”
“We have overfocused on unlocking cash at the very early stage through various tax-efficient investment schemes, but the money tends to evaporate post Series A. Companies get sold, fold or become walking zombies. Investment at the inflection point of international growth is critical for the tech company and offers the most significant returns for LPs.”
Codling, adds, “The businesses we back aren’t just an idea and a couple of letters of intent. These are successful businesses aligned with the Government’s Industrial Strategy. They have figured out product-market fit, have a solid go-to-market strategy and are achieving significant revenue of at least £5M ARR. Volution is the catalyst to propel them to the next stage, both financially and by leveraging the team’s extensive experience in scaling tech businesses.”
Besides financial returns, Volution is also launching an ESG-focused initiative to promote responsible growth in its portfolio. The Carbon Carry initiative encourages founders to adopt ESG best practices.
Volution also reinvests part of its profits into carbon offset programmes to address the environmental impact of AI-driven companies in its portfolio.
Brief about Volution
Volution is a venture capital firm that invests in fintech, SaaS, and AI businesses focused on productivity in capital markets and enterprise. The firm specialises in post-Series A investments, helping companies access the capital and support needed to reach Series B and beyond.
It provides flexible financing, strategic support, and leadership guidance to help businesses grow. The company’s collaborative structure aligns founders and investors, and it incorporates an ESG initiative, Carbon Carry, to reward companies that share its values.
Volution’s portfolio includes companies like Zopa, Cognism, Signal AI, Flagstone, and Wrisk.
What do the investors have to say?
Janine Hirt, CEO at Innovate Finance, says, “We are delighted to see the launch of the Volution SBI Co-GP vehicle, a testament to the strength and global appeal of the UK fintech sector. By focusing on innovative companies leveraging AI, machine learning, and blockchain to drive productivity, the fund addresses a critical funding gap and supports the growth of UK businesses wanting to reach global markets.”
“This partnership both aligns with the UK’s strategic priorities on fintech, AI, and innovation, and it reinforces the collaborative synergies between the UK and Japan.”
Michael Moore, Chief Executive at BVCA, adds, “The SBI Volution Venture fund is both a significant and timely partnership. With the rapid evolution of technology globally, both UK and Japanese investors recognise the unique strengths of Britain’s leadership in fintech and AI as well as its robust investment ecosystem. The fund’s focus on scaling businesses is vital, tapping into a swiftly developing market segment with a promising opportunity pipeline.”
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