As the UK launches a publicity campaign urging people to return to the office, London-based VC Dawn Capital hopes to tap into the growth of remote working during the pandemic with a new fund—its largest yet—targeting European B2B software startups.

The new vehicle, which reached its hard cap of €333 million (around $390 million), will focus on Series A and B rounds. Co-founder and general partner Haakon Overli said the fund will cover data and analytics, security, fintech and the "future of work," which includes trends such as remote working and digitalization.
"There's been a huge acceleration in how important people view enterprise software," Overli said. "People didn't turn off their Wi-Fi when COVID-19 hit, and it has been the same with companies. Software has become even more important for collaboration or for keeping track of data."

Dawn Capital's previous investments include UK cloud cybersecurity company Mimecast, which went public on the Nasdaq in 2015, and iZettle, a Swedish fintech startup that was acquired by PayPal for $2.2 billion in 2018. Overli said he hopes the recent growth of the enterprise software market, accelerated by the pandemic, will generate more unicorns.

Even before the crisis, the business software sector had seen significant growth. In January, research firm Gartner projected that worldwide IT spending would total $3.9 trillion this year. $503 million of that was forecast to come from enterprise software, an increase of 10.5% year-over-year.

It's uncertain whether that expansion will continue post-COVID. With the UK's GDP falling by 20.4% in the second quarter, IT budgets at hard-hit businesses may be strained. Moreover, at least in Dawn Capital's home market, pressure has been growing to reverse the work-from-home trend. Prime Minister Boris Johnson's government revised the UK's nationwide lockdown policy to allow people to return to their offices beginning Aug. 1.

Nevertheless, Overli—who said his firm's focus on the future of work predates the pandemic—insisted the shift to more remote working will be permanent even if workspaces start to fill back up. He predicted that in the long run, offices will likely combine remote working and keeping shared spaces reserved for essential face-to-face interactions, such as meeting new clients.

"I don't think anyone is going to take up these huge, thousands-of-square-feet leases because it's just not going to be needed," he added. "You're going to have more nimble units that are there for people to make new connections."

Featured image via Alistair Berg/Getty Images

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