Lakestar, an early investor in Spotify and Revolut, has closed a $265M continuation fund. The vehicle, anchored by Lexington Partners, allows longer holds on key assets.
A Strategic Move in a Challenging Market
European venture capital firm Lakestar has successfully closed a new $265 million continuation fund, a move designed to extend its investment horizon in some of its most promising late-stage companies. The fund was oversubscribed, signaling strong investor confidence. Lexington Partners, a specialist in the secondary market, served as the anchor investor, with significant participation from Industry Ventures and Performance Equity Management.
This financial structure enables Lakestar to transfer select assets from four of its existing funds into the new vehicle. The primary benefit is twofold: it allows the firm to continue supporting high-growth portfolio companies for a longer duration while also providing an essential liquidity option for limited partners from the original funds who wish to exit their positions. This strategy has become increasingly prevalent as the path to an initial public offering (IPO) remains difficult and exit timelines across the industry continue to lengthen.
Leadership and Fund Details
Klaus Hommels, the founder and chairman of Lakestar, commented on the fund’s importance. He highlighted that the vehicle is among the largest continuation funds raised within the European venture capital landscape. Hommels, known for his early and successful investments in companies like Facebook and Skype, currently serves as the chairman of the NATO Innovation Fund, bringing a depth of experience to the firm’s strategic decisions.
While Lakestar has not publicly disclosed which specific portfolio companies are included in the transfer, sources familiar with the deal have indicated that only partial stakes were moved. This approach allows the original funds to retain some exposure, ensuring they can still benefit from any future appreciation in the value of these assets.
A Growing Trend in Venture Capital
The creation of continuation funds is not unique to Lakestar; it reflects a broader adaptation to current market conditions within the global venture capital ecosystem. Several major U.S. firms have recently employed similar strategies to manage their portfolios and provide returns to investors. Prominent examples include General Catalyst, Lightspeed, and NEA, all of which have launched their own continuation vehicles to navigate the extended holding periods.
The trend is also well-established in Europe. In 2022, German venture firm HV Capital raised a €430 million continuation fund, one of the largest on the continent at the time. These moves underscore a collective industry shift towards finding alternative liquidity solutions when traditional exit avenues like IPOs and high-valuation acquisitions are less accessible.
Future Focus on Defence Technology
In addition to managing its existing portfolio, Lakestar is actively looking toward new and emerging sectors. The firm is concurrently raising a separate $300 million fund specifically targeting European defence technology companies. This initiative is strategically timed to capitalize on the significant increase in defence spending across the continent, demonstrating the firm’s intent to position itself at the forefront of key geopolitical and technological shifts. This dual approach of managing mature assets while investing in new growth areas illustrates a comprehensive and forward-looking strategy.
Updated: 29 August 2025
Related
