Dawn Capital is one of Europe’s top investors in the B2B software sector.

Dawn Capital, a leading European investor in business software companies, has defied the current venture capital slump by successfully raising $700 million across two new funds. This achievement stands out because venture capital investment in tech startups has declined in recent times.

The London-based VC firm boasts an impressive portfolio that includes companies such as iZettle, a payment firm acquired by PayPal for $2.2 billion in 2018, and Tink, an open banking startup acquired by Visa for 1.8 billion euros ($1.9 billion) in 2022. (CNBC)

According to Hannah Gubbins, a newly promoted partner at Dawn Capital, the firm overcame the challenges of raising these funds amidst a tough market based on its deep relationships with institutional investors cultivated over many years. Investors, despite market fluctuations, remain eager to invest in promising companies, recognizing the potential for strong returns.

Dawn Capital’s plans for the $700 million involve investing in 20 companies, utilizing two distinct funds. The first is a $620 million early-stage fund focused on Series A and Series B investments, while the second is an $80 million “opportunities” fund aimed at supporting promising companies in their portfolio that may pursue exit strategies through initial public offerings or acquisitions.

The venture capital landscape has shifted recently due to higher interest rates and inflation, favoring stable, profitable companies over high-growth but loss-making startups. Investors are closely monitoring IPOs of companies like Arm and Instacart for signs of a tech industry resurgence.

Despite market uncertainties, Gubbins emphasized that an IPO isn’t the sole exit option for founders, citing the successful acquisition of LeanIX, a company in Dawn’s portfolio, by SAP (ETR: SAP).

While artificial intelligence (AI) continues to thrive, with substantial investments pouring into AI companies, Dawn Capital remains committed to a diverse range of business-to-business software investments, spanning fintech, security, and infrastructure.

Gubbins noted that AI remains a disruptive force across various industries, making it an area of interest for the firm, alongside its core investment focus.

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