Volution launches $100M fund to close Britain's tech scale-up gap

UK-based venture capital firm Volution has announced the launch of its second fund, a $100M vehicle designed to address structural funding challenges faced by high-growth tech companies in the UK. The new fund is backed by a co-GP partnership with Japan’s SBI Investment Co. It aims to provide scale-up capital to fintech, AI, and SaaS businesses that need further investment to expand internationally.

While early-stage investment remains relatively robust, later-stage funding has seen sharp declines. According to recent data, Series A funding in the UK dropped by 44 percent in 2024 compared to the previous year, and the conversion rate from Series A to B has halved over the past five years. This trend poses risks to the country’s tech pipeline, with many promising businesses struggling to transition from early traction to global scale.

Volution’s fund seeks to fill that gap by backing companies poised for international expansion but underserved by current funding mechanisms. The fund has already made initial investments into one fintech and one AI company.

“The UK has a huge challenge at the moment. The government is laser focused on productivity and growth but there is a fundamental structural funding challenge," said James Codling, Managing Partner at Volution.

"We have overfocused on unlocking cash at the very early stage through various tax efficient investment schemes but the money tends to evaporate post Series A. Companies get sold, fold, or become walking zombies. Investment at the inflection point of international growth is critical for the tech company and offers the most significant returns for LPs."

“The businesses we back aren't just an idea and a couple of letters of intent. These are successful businesses aligned with the Government's Industrial Strategy. They have figured out product-market fit, have a solid go-to-market strategy, and are achieving significant revenue of at least £5m ARR. Volution is the catalyst to propel them to the next stage, both financially and by leveraging the team's extensive experience in scaling tech businesses.”

SBI Investment, the venture arm of Japanese financial giant SBI Holdings, has made a number of UK investments in recent years, including into Oxford Quantum Circuits, Elliptic, and Tide.

Tomoyuki Nii, Director and Executive Officer for Overseas Investment at SBI Investment Co., said: “The UK is a global leader in FinTech and AI, with world-class universities, a strong regulatory environment, and a thriving entrepreneurial ecosystem. These strengths make it an attractive destination for investment. Our cornerstone commitment to Volution comes at a time when Japan and the UK government are strengthening economic ties to drive growth across both markets. Building on the success of Volution’s first fund, it will provide a new funding option for fast-growing UK businesses looking to scale.”

Among Volution's investments is Zopa Bank, a UK fintech unicorn. The firm focuses on businesses that fall between the cracks of seed-stage and private equity investment, offering both capital and expertise to help companies grow to the next level.