Dawn Capital Closes $700 Million Fund to Back B2B Software Startups in Europe

Dawn Capital has closed a $700 million fund aimed at backing the bustling software market.

The British venture capital firm announced the fund Monday (Sept. 25), saying it would use the money to back B2B software companies as the sector continues to expand.

“We have raised fresh capital to invest in the best-of-the-best European founders pioneering the technology innovations that will drive these monumental platform shifts over the coming decades,” Dawn wrote in a blog post.

The fundraise is made up of two new funds: a $620 million “Dawn V,” which it called Europe’s largest-ever dedicated early-stage B2B software fund; and an $80 million follow-on fund, “Dawn Opportunities III.” Dawn V will support startups at the Series A and B stages with initial investments of $10 million to $40 million, while Dawn Opportunities III will back companies from the Series C stage onward, per the post.

“Combined, these funds ensure we can continue meaningfully investing in founders building the next generation of software from Series A all the way to exit,” the post said.

The news follows months of reports about a downturn in venture funding. For example, The Wall Street Journal (WSJ) reported last month that the amount of venture capital (VC) invested in Europe dropped by 61% in the first half of 2023, a sharper reduction than what American startups have had to contend with.

Consequently, the European Union’s development bank and five EU countries are working to close the funding deficit. They pledged $4.1 billion to support the region’s tech sector.

Against this backdrop, cash-hungry tech startups have increasingly begun looking for buyers among larger companies for buyers.

Among them is Databricks, which announced a $1.3 billion mostly stock deal to buy artificial intelligence (AI) startup MosaicML. Typeface, meanwhile, was valued at $1 billion after an oversubscribed funding round overseen by Salesforce’s investment arm.

Jay Wilson, investment director at U.K.-based investment firm AlbionVC, told PYMNTS in June that while VC has long been seen as the holy grail of startup funding, that couldn’t be further from the truth.

“Venture capital is wrong for about 99% of businesses out there,” Wilson told PYMNTS in an interview, adding that “VC money is designed for very specific types of businesses with very specific types of ambition, and in reality, it is a very expensive financing method.”

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