Dawn Capital closes $125M Opportunities Fund to double down on its biggest bets

Dawn Capital has made a name for itself over the last several years for having a sharp eye when it comes to spotting interesting B2B startups in Europe before they become big, with companies like iZettle (acquired by PayPal last year for $2.2 billion), Mimecast (IPO’d and now worth $2.8 billion), Collibra and Showpad among its stable. Today, it’s announcing the close of a new fund that will help it capitalise on those growing bets more directly itself.

The $125 million Opportunities Fund, as it is called, will be used by London-based Dawn to make larger investments in a smaller, cherry-picked selection of startups that it has already backed in earlier stages. It comes on the heels of Dawn also closing a bigger fund of $235 million, Dawn III, for those Series A and B rounds, and brings the total raised by the firm to $360 million for the year.

Dawn will continue to partner with larger VCs that have led many of the later-stage rounds in its portfolio companies — follow-on investor names that have been involved in multiple Dawn companies have included Insight, Index Ventures, KPCB, Battery Ventures and Iconiq — but now it will also occasionally be taking a leading role in the rounds, or at least making investments on par with those of the partners.

The move to making bets of tens of millions on a smaller group of companies at Series C stage and beyond is part of Dawn’s ethos to provide not just money, but advice and assistance to founders to help them realise opportunities and grow into them.

“We exist to serve our founders,” said Haakon Overli, the general partner who co-founded Dawn Capital with Norman Fiore. “They are much better at doing their jobs than the founders of 25 years ago, and we don’t want them running around fundraising all the time. Getting bigger checks means they don’t have to.”

Indeed, the closing of the Opportunities Fund highlights how the European tech ecosystem — and specifically the startup ecosystem — has evolved over the last several years. As Fiore describes it, raising smaller amounts on a rolling or more frequent basis was the norm for many founders before the rise of larger two- and three-figure million-dollar rounds came onto the scene.

Case in point: You can see the jump effect on overall funding in this report on Tech.eu. Last year saw €24.7 billion in funding for European startups. Although that was slightly down on €25 billion the year before, the number of deals dropped from 3,400 to 3,000 — meaning the average size of the deal has grown.

It was also par for the course to see startups out of the region move to the U.S., and take on U.S. investors, as they started to gain traction.

The reasons for decamping to the U.S. to scale up were twofold: it is a large and cohesive market both for customers and talent, with strong channels for subsequent global expansion; but it was also a major market for funding, with a distinct lack of VCs in Europe willing or interested or able to make the larger, late-stage investments that more mature startups need to get to the next level of their growth, and later on to give the companies the push they might take either to exit to even larger companies or go public.

Fast-forward to today, and that has changed, for the better. There are still a lot of startups making the move to the U.S., but they are often doing so in tandem with continuing to grow on this side of the pond, as well. On the investment side, meanwhile, Valley investors are increasingly making the trip to this region to source and back interesting companies, and VCs here are also getting more interest from their own LPs to continue on with the good work they’ve done in sourcing interesting companies, by continuing to invest.

Dawn is riding this later wave.

“The scale and regulatory boundaries of today mean you can build huge opportunities out of Europe without going to the U.S.,” said general partner Josh Bell. “Software-as-a-service is a global play.”

Dawn’s track record so far with investing has put it into the top 5% of all firms in Europe in terms of returns. Looking ahead, it’s hoping that it can keep this place as it puts down bigger bets. The latest of these — a big investment into a B2B startup — will be coming up next week.