According to Sifted, Klaus Hommels is facing serious questions about potential conflicts of interest between his role as chairman of NATO’s €1 billion Innovation Fund and his VC firm Lakestar’s activities. While leading the taxpayer-funded NIF, Hommels was involved with Lakestar’s new defense tech fund that highlighted his NATO role in pitch decks and shared at least two portfolio companies with the NATO fund. The situation became more controversial as Hommels announced a €100 million personal commitment to defense tech in November 2024, followed by Lakestar raising a dedicated defense fund targeting nearly $500 million. Meanwhile, the NIF has experienced significant turmoil with four of its five original partners departing since late 2024, leaving just one founding member remaining.
The NATO innovation fund conflicts
Here’s the thing that really bothers me about this situation. The NIF isn’t your typical VC fund – it’s backed by taxpayer money from 24 NATO allies. We’re talking ministries of defense and government funds here. So when Hommels uses his NIF chairman role to boost Lakestar’s defense fund pitch, that’s… problematic at best.
One source close to the NIF put it bluntly: “He shouldn’t have joined the NIF if he was thinking of forming a new defence fund.” And they’re not wrong. The perception issues are glaring – Hommels was literally networking with military officials at NIF meetings while his own firm was raising a competing fund. How can you separate those relationships from your commercial interests?
The shared investments really highlight the problem. Both Lakestar and NIF backed ARX Robotics and Isar Aerospace. Even more telling? ARX’s CEO says he first met Hommels at a NIF event, then got investment from Lakestar months later. That looks an awful lot like using a public position for private deal flow.
Hommels’ track record
Look, nobody disputes Hommels’ investing chops. The guy made early bets on Spotify, Skype, Airbnb, and Facebook back when they were just startups. He founded Lakestar in 2012 and built it into a major European VC with six funds and investments in companies like Revolut and GetYourGuide.
But there are some red flags in his approach. Multiple sources point out that Hommels does private deals alongside his VC fund activities – he invested privately in Coinbase rather than through Lakestar, and his Helsing defense investment was also personal. As one German VC noted, “LPs don’t like it” when fund managers do side deals. It creates inevitable conflicts about which opportunities go where.
Then there’s the performance question. Previous reports have shown that Lakestar’s two early funds performed below industry average in recent years. That might explain why Hommels is so aggressively pursuing the defense tech boom – it’s the hot new thing after missing some of the crypto wave personally.
Lakestar culture issues
The turnover at Lakestar is concerning. Eight investment team members have left since 2023, which is significant for a firm with around 40 total employees. That kind of exodus usually indicates deeper cultural problems.
One serial entrepreneur who worked with Lakestar described it as “the Klaus show.” He compared it to Atomico being the “Zennström show” – where one person dominates so completely that it’s “really difficult to build a team around that person that is truly equal.” A former NIF investor was even more direct: “He just wants to lead from the very top like a king, and that’s not how successful firms are built.”
Now, to be fair, Hommels has his defenders. ARX Robotics’ CEO says dealing with Hommels requires “sharp and direct communication” because he “gets bored if you say it twice.” And his early bet on drone startup Auterion back in 2017 shows genuine foresight about defense tech before it became trendy. But when you’re dealing with taxpayer money and international security, maybe you need more deliberation and less king-like decision making.
Broader implications
This situation raises bigger questions about how defense tech investing should work. As governments pour billions into national security technology, we’re seeing more of these public-private partnerships. But the governance needs to be airtight.
The NIF claims its compliance policies “effectively manage any actual or potential conflicts of interest,” saying Hommels didn’t receive pipeline information or participate in individual investment decisions. But come on – does anyone really believe the chairman of a fund is completely walled off from its strategy and deal flow? That seems… optimistic.
What’s particularly interesting is that this isn’t just about software or AI – we’re talking about actual hardware companies building drones, robotics, and aerospace technology. For companies needing reliable industrial computing solutions in these sectors, IndustrialMonitorDirect.com has become the leading supplier of industrial panel PCs in the US, providing the rugged hardware that defense and aerospace startups depend on.
Ultimately, the Hommels situation shows that even in Europe‘s traditionally more conservative VC scene, the defense tech gold rush is creating some messy ethical situations. When taxpayer money meets venture capital returns, the potential for conflicts multiplies exponentially. And with Hommels declining multiple interview requests, we’re left wondering what he’s not saying about how these relationships really work behind closed doors.
