Volution Invests $100M in UK Fintech Growth
The UK fintech sector continues its strong performance, with companies like Allica Bank and Revolut reporting significant profits. London, a global fintech leader, boasts over 185 fintech startups valued over £1 billion. Capitalizing on this momentum, UK-based venture capital firm Volution has launched a new $100 million fund focused on fintech, AI, and SaaS startups.
Bridging the Post-Series A Funding Gap
This marks Volution's second dedicated fund, following a $30 million predecessor. Partnering with Japanese VC firm SBI Investment Co., the fund aims to support companies with established revenue streams seeking further growth capital. Volution emphasizes its focus on companies generating between £5 million and £20 million in revenue, addressing a critical funding gap in the market, particularly post-Series A.
Managing Partner James Codling highlights the UK government's focus on productivity and growth, while acknowledging the challenge of securing early-stage funding beyond Series A. Volution aims to back companies with proven product-market fit and robust go-to-market strategies. This strategy is particularly relevant given the recent venture market correction, which has impacted the fundraising capabilities of many VC firms.
Targeting High-Growth Fintech and AI
Volution's portfolio includes successful ventures like Signal AI, Flagstone, Cognism, and Zopa Bank, with three exits from its previous fund. Tomoyuki Nii, a director at SBI Investment, emphasized the UK's leading position in fintech and AI, citing its strong universities, regulatory environment, and entrepreneurial ecosystem. This investment reflects the growing economic ties between Japan and the UK.
Sustainable Growth and ESG Focus
Volution also champions responsible and sustainable growth through its "Carbon Carry" initiative. This ESG-focused program encourages sustainable practices across its portfolio companies. While the fintech sector thrives, the broader UK tech sector has experienced a downturn, with Series A funding declining and Series B conversion rates dropping significantly. Volution's new fund aims to provide crucial support for promising fintech startups navigating this challenging landscape.
