Lakestar raises $300 million defence tech fund as investor warns Europe on U.S. reliance

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Lakestar $300M defence fund

Highlights

Lakestar launched a $300 million resilience fund focused on dual-use and defence tech, backed by investors such as BAE Systems, to boost European independence from U.S. technology and capital.
Klaus Hommels, Lakestar's founder, signaled a strategic pivot away from generalist funds, warning Europe must maintain governance of critical defence technologies amid tightening U.S. AI export restrictions.
In 2024, Lakestar plans over €100 million in defence investments and urges consolidation among European defence companies to improve procurement success and mobilize private capital.

Fund launch and strategic warning

As reported by the Financial Times, Lakestar says the new resilience fund will invest in dual-use and defence technology companies, with backing from investors including the UK's BAE Systems. Klaus Hommels, founder of the venture capital firm, argues that recent U.S. restrictions on exports of sensitive AI models by Anthropic show why Europe needs greater technological and financing independence.

Hommels says Europe should reduce its exposure to American technology suppliers and capital providers, warning that governance over critical defence technology must remain European in any escalatory scenario. He also signalled last year that Lakestar would stop raising generalist venture funds as he shifted attention toward strengthening Europe's resilience.

Lakestar has appointed former U.S. diplomat Mike Pompeo, former UK chief of defence staff Sir Nicholas Carter, former German armed forces chief of staff Volker Wieker and UK technology entrepreneur Martha Lane Fox to the fund's advisory board. Hommels also chairs the Nato Innovation Fund's geopolitical and strategic advisory council.

Defence investment momentum in Europe

Investor appetite for defence technology is rising as European governments prepare for higher military spending after Russia's full-scale invasion of Ukraine in 2022. Changes in battlefield technology, especially the wider use of drones, are also increasing demand for companies that can supply new military capabilities.

Lakestar has already backed several defence technology groups in the region, including UK drone interceptor company Cambridge Aerospace, German drone maker Helsing and rocket start-up Isar Aerospace. In 2024, Hommels says he would invest more than 100 million euros of his own money in defence start-ups, arguing even before Donald Trump's re-election that Europe needed to bolster its resilience.

He says this year is critical for European defence technology start-ups to prove their systems work and to secure military procurement contracts. Hommels also calls for mergers among European defence technology companies so they can build larger competitors with better chances of winning procurement deals and mobilising more private capital.

Our earlier article examined the surge in overseas takeovers of London-listed companies alongside a slump in new UK listings, a gap that has intensified worries about depressed valuations and weak equity sentiment. It also highlighted calls for clearer policymaking and targeted market reforms to rebuild investor confidence and keep more long-term capital and corporate growth anchored in the UK.

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