Prominent European VC Lakestar Shifts Strategy, Halts External Fundraising

Strategic Shift for European Venture Capital Leader

Lakestar, one of Europe’s most prominent venture capital firms known for early investments in Spotify and Revolut, is reportedly planning to stop raising external capital, according to sources familiar with the matter. The firm, founded by veteran investor Klaus Hommels, intends to focus on maximizing returns from its existing portfolio while maintaining flexibility to pursue selective new opportunities.

Focus on Current Investments and Internal Ventures

According to reports, Hommels outlined the strategic shift in a letter to limited partners seen by the Financial Times. “Going forward both Lakestar’s and my focus will be on maximising the potential of the existing portfolio and we will not raise any new generalist venture funds as we have in the past,” Hommels reportedly wrote.

The firm’s current portfolio includes defense technology groups Helsing and Auterion, which have become increasingly significant investment areas for Hommels in recent years. Sources indicate the firm will continue backing a new generation of European startups while concentrating on developing its existing investments.

Increased Flexibility and Strategic Freedom

Analysts suggest the move away from external fundraising provides Lakestar with greater operational flexibility. Without the time commitments and constraints associated with raising outside capital, the firm reportedly aims to deploy its own resources more strategically while focusing on maximizing gains from current holdings.

The strategy mirrors approaches taken by other successful venture firms, including Vy Capital, a significant backer of Elon Musk’s companies, which has similarly shifted away from external fundraising after achieving substantial returns.

Future Investment Directions

According to the reported letter, Lakestar plans to “seed promising ventures initiated by talented members of the Lakestar team as they embark on their own entrepreneurial journeys.” The firm will also reportedly develop “targeted new investment products to help our portfolio companies grow, and seize other emerging opportunities.”

One exception to the fundraising halt appears to be a specialized €250 million “resilience” investment vehicle focused on defense technology. Sources indicate Hommels has already raised a majority of this fund and may consider similar targeted vehicles in the future.

Defense Technology as Strategic Priority

Defense technology has emerged as a major focus area for Hommels, who serves as chair of the NATO Innovation Fund’s advisory council and sits on the Security Innovation Board for the Munich Security Conference. Reports suggest he has been emphasizing European defense resilience for several years, even before recent geopolitical developments increased sector interest.

Last year, Hommels reportedly committed to investing more than €100 million of his personal wealth in defense startups, warning that Europe needed to bolster its resilience regardless of U.S. political developments.

Established Track Record and Future Outlook

Since its founding in 2012, Lakestar has raised more than €2 billion and established offices in Berlin, London, and Zurich. The firm is reportedly on track to raise nearly $500 million through its newest funds by year-end before implementing the fundraising pause.

Hommels has personally backed numerous technology successes including Spotify, Revolut, Klarna, Skype, Airbnb, and Facebook. His firm’s recent investments include Neko, a health technology startup founded by Spotify’s Daniel Ek, demonstrating continued involvement with Europe’s entrepreneurial ecosystem despite the strategic shift.

The move represents a significant evolution in venture capital strategy, with successful firms increasingly opting to manage existing portfolios rather than continuously expanding their fund sizes, according to industry analysts.

References

• http://en.wikipedia.org/wiki/Venture_capital
• http://en.wikipedia.org/wiki/Spotify
• http://en.wikipedia.org/wiki/Revolut
• http://en.wikipedia.org/wiki/Klaus_Hommels
• http://en.wikipedia.org/wiki/Financial_Times

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