Strategic Shift for European Venture Giant
Lakestar, one of Europe’s most prominent venture capital firms, has informed investors it will halt raising new generalist venture funds, according to reports. Founder Klaus Hommels stated in a letter to investors that future startup investments will primarily utilize his personal capital rather than institutional funds. The Zurich-based firm, which manages over $2 billion in assets, plans to focus on maximizing value from its existing portfolio companies.
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Table of Contents
Portfolio Concentration Strategy
The German-born investor, renowned for early bets on Facebook and Spotify, indicated his attention would center on high-profile portfolio companies including Revolut, reportedly in discussions for a $75 billion valuation. Sources indicate Hommels will also prioritize defense technology unicorns Helsing, Auterion, and German rocket manufacturer Isar Aerospace. This strategic realignment follows Lakestar’s recent $500 million raise for specialized defense and continuation funds earlier this year.
European Venture Funding Downturn
Lakestar’s decision coincides with a significant contraction in European venture capital fundraising. Industry analysts suggest that despite growing interest in artificial intelligence and defense technology startups, institutional investors have become more cautious. According to PitchBook data, European venture funds have raised approximately $8 billion year-to-date, representing a dramatic two-thirds decrease from the $27 billion raised throughout 2024.
Personal Capital and Team Development
Hommels revealed plans to provide seed funding for several Lakestar team members to establish their own investment funds, according to the investor letter. The firm will continue operating but primarily deploy Hommels’ personal capital while considering “targeted new investment products” from external investors to support existing portfolio companies. This approach follows Hommels’ previous commitment to invest over $100 million personally in European defense industry revitalization.
Regulatory Scrutiny and Governance
The strategic shift comes amid increased scrutiny of Hommels’ investment activities. German publication Handelsblatt reportedly documented investor concerns regarding side investments in breakout startups like Revolut. Earlier this year, Hommels resigned as chair of the NATO Innovation Fund following conflict of interest allegations related to the fund backing two Lakestar portfolio companies, though he remains advisory council chair. Lakestar declined to comment when approached regarding these developments.
Industry Implications
Lakestar’s restructuring signals a potential trend toward portfolio consolidation among major venture firms during market downturns. As one of Europe’s largest venture capital entities with offices in London, Zurich, and Berlin, its strategic pivot may influence other firms facing similar fundraising challenges. The move highlights how even established investors are adapting to the current environment of reduced exit opportunities and more selective institutional backing for startup companies.
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References
- https://pitchbook.com/…/has-european-vc-fundraising-already-hit-rock-bottom
- http://en.wikipedia.org/wiki/Venture_capital
- http://en.wikipedia.org/wiki/Startup_company
- http://en.wikipedia.org/wiki/Klaus_Hommels
- http://en.wikipedia.org/wiki/Unicorn_(finance)
- http://en.wikipedia.org/wiki/Valuation_(finance)
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