European VC firm Lakestar, known for backing companies like Revolut and Spotify, has raised a $265m continuation fund, among Europe’s largest to date.
Continuation funds allow VC firms to hang onto their mature companies for longer with the hope of making bigger returns in the future. They also provide LPs with a way to cash out.
Continuation funds were traditionally more common in private equity but more VC firms are beginning to copy the playbook.
Lakestar’s new vehicle is backed by Lexington Partners as lead investor, alongside Industry Ventures, Performance Equity Management and a group of secondary investors.
The VC declined to comment on which companies will be transferred to the continuation fund, but said that it involves a select group of premium companies across four existing Lakestar funds.
The continuation fund launches at a time when companies are staying private for longer, pushing VCs to find other ways to continue to invest in their portfolio, as holding periods are extended and the upside for returns is even greater. HV Capital was among the first VCs in Europe to raise a continuation fund in 2022 of €430m.
Lakestar last raised a fund in April 2024, a $600m early stage and growth stage fund. The firm headquartered in Zurich is also reportedly seeking $300m for a new European defence fund, Bloomberg reported in June.
