The funding for the VC firm comes amid a decline in VC investments amid soaring inflation and high interest rates. Credit: giggsy25/Shutterstock.

Dawn Capital, a UK-based venture capital (VC) firm, has announced a $700m (£573.92m) fundraising to invest in the European B2B software industry.

The fundraising comprises $620m for the Dawn V fund and $80m for the Dawn Opportunities III fund.

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Dawn V will offer initial funding ranging from $10m to $40m to founders at the Series A and B stages.

The Dawn V fund, its “most ambitious flagship fund” to date, is the largest specialised early-stage B2B software fund ever raised in the European region.

Meanwhile, Dawn Opportunities III will support the firm’s portfolio companies, beginning at the Series C level.

Based in London, Dawn Capital has companies including iZettle, a Sweden-based online payments company, and Tink, an open banking player, in its portfolio.

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“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 Capital said in a statement.

The funding for VC firms comes amid a decline in venture capital investments as inflation soars and interest rates rise, reported CNBC.

However, AI is one of the areas that is still attracting investment.

Dawn Capital partner Hannah Gubbins stated: “We are doubling down on what we have always done.

“AI is absolutely one of the areas we are looking at. Both investing in AI companies but also as something that is disrupting every sector and company.”

In September 2023, Amazon confirmed that it will invest up to $4bn in Anthropic, an AI start-up, and Databricks raised $500m at a $43bn valuation to develop AI-powered software tools.

In June, Inflection AI raised $1.3bn in a funding round led by Microsoft, which has also invested billions in ChatGPT maker OpenAI.