Lakestar has raised a $265m continuation fund to extend its investments in selected portfolio companies, marking one of the largest such vehicles in European venture capital, according to Bloomberg.

The fund, which was oversubscribed, is anchored by Lexington Partners with additional commitments from Industry Ventures, Performance Equity Management, and other secondary investors. It provides liquidity to backers of four existing Lakestar funds while enabling the firm to retain exposure to high-performing assets.

Founder Klaus Hommels said the fund is among the largest ever continuation vehicles in Europe’s venture capital sector, underscoring the growing adoption of such structures as IPO markets remain muted and exits delayed.

Lakestar did not disclose the specific companies included, but in most cases only partial stakes were transferred, allowing older funds to maintain upside in any future exits.

Continuation funds, long used in private equity, are increasingly emerging in venture capital as investors seek liquidity alternatives. In the U.S., firms such as General Catalyst, Lightspeed, and NEA have launched continuation funds, while HV Capital rolled out a €430m ($500m) vehicle in 2022.

The raise comes as Lakestar also pursues a separate $300m fund focused on European defence technology. PJT Partners and Clifford Chance advised on the continuation fund.

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