Volution VC, a UK venture capital firm, has launched a $100 million fund in collaboration with Japan's SBI Investment Co., Ltd., aimed at addressing the funding challenges faced by companies transitioning from Series A to Series B.

The fund is specifically designed to support high-growth sectors such as FinTech, AI, and SaaS, targeting businesses that have established revenue streams and are poised for scaling.

James Codling, Managing Partner at Volution, highlighted the critical need for investment at these growth stages, noting that many startups struggle to secure necessary capital after the Series A round.

This funding gap is underscored by a significant decline in UK funding, with Series A investments plummeting by 44% in 2024 compared to the previous year, and conversion rates from Series A to Series B decreasing by over 50% in the past five years.

Challenges in the current market include potential selection bias due to high eligibility criteria and the risks associated with market saturation, which can inflate company valuations.

The collaboration between Volution and SBI aims to enhance the UK's reputation as a global leader in FinTech and AI, leveraging its strong educational institutions and regulatory environment.

Janine Hirt, CEO of Innovate Finance, praised the fund's focus on innovative companies, aligning with national priorities in technology and innovation.

The fund not only provides financial backing but also offers strategic knowledge to help tech firms enhance their services and expand internationally.

Volution emphasizes responsible investing, focusing on data protection and cybersecurity compliance for the companies it supports.

Additionally, Volution is committed to ESG initiatives, including its Carbon Carry program, which promotes sustainable practices among its portfolio companies.

Volution has a proven track record, with its first fund achieving 300% average revenue growth and notable exits, including the unicorn Zopa Bank.

The fund's innovative co-GP structure is designed to attract institutional investors from Japan's $3.6 trillion pension market, allowing for shared risk and strategic oversight.