Volution Partners with SBI Investment for a $100 Million Tech Startup Fund
Volution, a prominent UK-based venture capital firm dedicated to fostering growth within tech startups, has recently unveiled a new $100 million fund aimed at tackling productivity challenges in capital markets and various enterprises. This initiative represents Volution’s second dedicated fund, developed in collaboration with SBI Investment Co., Ltd., a leading Japanese venture capital firm, through a Co-GP partnership. The launch builds on the success of Volution’s inaugural fund, with many of its existing limited partners (LPs) opting to invest in this promising venture.
The State of the UK Fintech Sector
The UK fintech landscape continues to flourish, showcasing significant successes. Notable examples include Allica Bank, which managed to double its profits in 2024, and neobank Revolut, which reported a staggering £1 billion profit that same year. According to HSBC Innovation Banking, London is home to over 185 fintech startups valued at over £1 billion, underscoring its status as a global fintech hub.
Nevertheless, the funding environment is facing challenges. In 2024, Series A funding saw a sharp decline of 44%, and the conversion rates from Series A to Series B rounds have halved over the past five years. This situation creates a critical gap that Volution aims to fill by providing essential capital to companies with established revenue streams that require additional resources for scaling.
Bridging the Funding Gap
The urgency for this $100 million fund is to bridge the crucial gap between Series A and Series B funding stages. Volution supports businesses that demonstrate solid revenue—specifically, those generating at least £5 million in annual recurring revenue (ARR)—which find themselves at a pivotal moment for international expansion. Initial investments include innovative projects like an AI-driven supply chain optimization platform and a blockchain-based environmental, social, and governance (ESG) reporting tool, both strategically targeting rapidly growing sectors.
By focusing on companies that have already achieved product-market fit, Volution positions itself as a catalyst for these startups, helping them to navigate their path to international growth.
Insights from the First Fund
Volution’s inaugural fund, which successfully raised $30 million, delivered impressive outcomes, including an average revenue growth of 300% across its portfolio and three successful exits. A standout portfolio company, Zopa Bank, is gearing up for an anticipated IPO in 2025. The firm’s strong track record includes backing high-growth companies such as Signal AI, Flagstone, and Cognism, reinforcing its credibility in the venture capital space.
Managing Partner James Codling has pointed out the structural funding challenges the UK market faces, particularly in the aftermath of Series A rounds. He emphasizes the importance of investment during this critical inflection point, where businesses are ready to scale internationally.
“The UK startup ecosystem has unlocked early-stage capital,” Codling noted. “However, too many promising enterprises falter due to a lack of growth funding.” By concentrating on businesses with notable revenue, Volution’s fund seeks to provide vital support that will help them expand globally.
Expanding Global Opportunities
The partnership with SBI Investment Co. is particularly advantageous, offering UK startups access to Japan’s vast $5 trillion economy along with its extensive corporate networks. This global dimension is essential for startups aiming for strategic growth, partnerships, and M&A opportunities beyond their national borders.
Tomoyuki Nii, Director at SBI Investment, highlighted the synergy between the UK’s advancements in fintech and AI and Japan’s financial prowess. He stated that the partnership aligns perfectly with the rising demand for investment in these fast-growing sectors, positioning Volution for success in a competitive global market.
Aligning with Industry Trends
The focus of Volution’s new fund aligns with the UK’s Industrial Strategy, concentrating on sectors like fintech, artificial intelligence (AI), software as a service (SaaS), and blockchain technologies. By selecting startups that demonstrate not just potential, but proven success in their respective industries, Volution affords itself a strategic advantage in cultivating the next generation of innovative companies.
This initiative reflects an understanding of the current market landscape and the financial hurdles faced by startups. By providing targeted support and fostering synergies with established partners like SBI, Volution is well-positioned to make significant contributions to the ongoing evolution of the fintech ecosystem.