Lakestar’s $265M Continuation Fund: A Strategic Bet on Europe’s Deep Tech Future

In 2025, Europe’s deep tech sector is no longer a niche curiosity but a cornerstone of its economic and geopolitical strategy. At the heart of this transformation lies Lakestar’s $265M Continuation Fund, a vehicle designed to extend capital and strategic support to high-impact deep tech ventures. This fund, part of Lakestar’s broader commitment to European innovation, underscores a critical shift in venture capital: the recognition that long-term, science-driven innovation requires sustained investment beyond the typical 10-year fund lifecycle.

The Resilience of Deep Tech in Europe

Deep tech—rooted in breakthroughs in physics, engineering, and computational science—has emerged as the most resilient segment of Europe’s venture ecosystem. In 2024, European deep tech startups secured €15 billion in funding, accounting for one-third of all VC investments on the continent [1]. This resilience contrasts sharply with the volatility of AI and software-driven sectors, which saw sharper declines during the 2023-2024 market downturn. The 2025 European Deep Tech Report, co-authored by Lakestar, Walden Catalyst, and Dealroom, attributes this strength to deep tech’s ability to create defensible intellectual property (IP) moats and address systemic challenges like climate change, cybersecurity, and healthcare [1].

The sector’s strategic importance is further amplified by its alignment with Europe’s push for digital sovereignty. For instance, novel AI and space technologies are now prioritized over traditional AI and machine learning in European VC portfolios, reflecting a deliberate pivot toward domains where technical complexity and geopolitical relevance intersect [2].

Continuation Funds: Enabling Long-Term Innovation

Continuation funds like Lakestar’s $265M vehicle are uniquely positioned to fuel this trajectory. Unlike traditional VC funds, which often face pressure to exit investments within a decade, continuation funds extend capital to portfolio companies beyond their initial fund’s lifespan. This structure is particularly vital for deep tech, where breakthroughs in robotics, quantum computing, or biotech can take a decade to commercialize.

Lakestar’s approach is not merely financial. The firm leverages its network of corporate partners (e.g., Siemens, Bosch) and academic institutions to accelerate R&D and scale applications. For example, its advisory board bridges business and political spheres, ensuring that investments align with EU policy goals such as the European Chips Act and the Green Deal [2]. This alignment reduces regulatory friction and enhances the scalability of deep tech solutions.

Strategic Autonomy and the Lakestar Model

Lakestar’s Continuation Fund is part of a broader strategy to strengthen Europe’s technological autonomy. The firm’s plans to launch a $300M defense fund for security-tech startups—spanning both civilian and military applications—highlight its focus on sectors critical to national security [3]. By extending capital to these ventures, Lakestar is not just backing companies but also reinforcing Europe’s ability to compete with U.S. and Chinese tech ecosystems.

The firm’s emphasis on “minimum valuable probes” (MVPs) over traditional MVPs further illustrates its long-term orientation. This approach prioritizes rigorous scientific validation over rapid commercialization, ensuring that investments are grounded in scalable, defensible technologies [2]. For instance, Lakestar-backed startups in energy innovation and space tech are already demonstrating how deep tech can address energy independence and satellite-based infrastructure gaps.

Conclusion: A Blueprint for the Future

Lakestar’s $265M Continuation Fund exemplifies how venture capital can evolve to meet the demands of deep tech. By extending capital, aligning with policy, and prioritizing scientific rigor, the fund is not just supporting startups—it is building the infrastructure for Europe’s next wave of technological leadership. As the 2025 Deep Tech Report notes, the continent’s ability to transition from an “innovation customer” to an “innovation creator” hinges on sustained, strategic bets like these [1].

For investors, the lesson is clear: continuation funds are not a stopgap but a strategic lever to unlock the full potential of deep tech. In a world where technological sovereignty is as critical as economic growth, Europe’s deep tech ecosystem—backed by firms like Lakestar—may well define the next decade of global innovation.

Source:
[1] Lakestar, Walden Catalyst and Dealroom launch the 2025 European Deep Tech Report, [https://lakestar.com/news/2025-european-deeptech-report]
[2] Lakestar announces closing of its latest fund generation for ... [https://lakestar.com/news/lakestar-announces-closing-of-its-latest-fund-generation]
[3] Revolut and Glovo backer Lakestar eyes $300M fund to ... [https://techfundingnews.com/lakestar-european-defence-fund/]