Klaus Hommels on Venture Portfolios, European Defense and Backing Founders

Harry Stebbings asks Lakestar founder Klaus Hommels how Puma started his investing journey. Growing up on a farm near Mönchengladbach, Hommels says his grandmother gave him money to buy stocks, promising to cover losses. He chose Puma because of his football team and says a leveraged investment made him 100,000 in three months, compared with ten a month in pocket money.

He later lost the money. The experience taught him that early losses can be as painful as larger losses later in life. For a long time he imposed a three-month pause after an exceptional hit, to guard against mistaking luck for the ability to walk on water.

Stebbings asks whether wealth makes investors better by reducing fear of losses. Hommels says he is drawn to a particular founder or technology rather than simply deploying more capital in a rising market. He wants to be able to spend time helping the company and describes himself as an outsourced business-development person.

In his view, entrepreneurs take concentrated personal risk and should be the stars; the investor’s role is to improve their odds. Hommels dislikes vanity and excessive self-promotion, although his suggested link between social-media activity and efficiency is an impression rather than a measured finding. Mistakes are inevitable, he says, but investors should learn rules to avoid repeating them.

Stebbings describes founders giving investors very little time to build a relationship before deciding. Hommels accepts that he will not win every deal and that he may sometimes fail to explain his contribution. He takes satisfaction when founders he has backed invite him into their next company, citing repeat relationships including SumUp and Neko.

Hommels distinguishes speaking publicly to advance a mission from posting for self-promotion. He considers the latter a distraction from the work of helping entrepreneurs. The discussion also acknowledges that venture firms use public communication to reach founders and compete for opportunities.

At a macro level, Hommels argues that a society’s ability to finance risk shapes its progress. He estimates that Europe once financed innovation at around 4% of GDP and that today venture supplies about 0.5%, calling this an eightfold shortfall. These are his broad comparisons, not independently established equivalent measures of historical and current innovation financing.

Stebbings challenges the premise, arguing that Europe has too much capital chasing too few high-quality startups and producing high prices. Hommels sees those conditions as cyclical and distinguishes them from a structural financing problem. Over an eight-to-ten-year company journey, he says, investors should expect multiple market phases.

He argues Europe now produces more genuine technical founders than during an earlier era of prominent copycat businesses. He suggests that entrepreneurial unfamiliarity once deterred technically trained Europeans and points to universities such as ETH, the Technical University of Munich and KTH as sources of talent. His account is an interpretation, not a comprehensive census.

Stebbings raises weak European stock-market liquidity. Hommels describes a Frankfurt listing anecdote in which he says an exchange photo was quoted at €400,000, so his team staged its own image instead. He uses the story to criticize a culture he considers insufficiently supportive of founders; the price is his account, not independently checked here.

Hommels favors a common European stock exchange to pool liquidity and argues that regional interests have obstructed such efforts. He also wants pension funds to allocate more to venture capital, citing much larger US allocations than European ones. He has a direct interest as a venture fund manager, and the figures and comparisons he gives are his own.

He even suggests requiring pension funds to invest in venture, claiming this could improve pensions and fund innovation simultaneously. His illustrative comparison of pension outcomes assumes higher compounded returns; it does not establish that venture investment would deliver those returns or account for fees, illiquidity and risk. Stebbings counters that large pension funds often invest in enormous funds that may produce mediocre returns.

Hommels replies that even a fund returning twice invested capital can look attractive compared with low guaranteed yields, although the time period and cash flows matter for that comparison. On the current shortage of IPOs and acquisitions, he says liquidity will return and quality businesses will find buyers; this is his expectation, not a guaranteed exit.

Asked whether defense is large enough for a venture portfolio, Hommels disagrees with the view that it is too small. He expects new technology and spending to expand the opportunity. He chairs the NATO Innovation Fund and has a direct professional interest in developing this ecosystem.

He says he is less interested in constructing a portfolio than in finding a few exceptional companies. Portfolios and diversification are a practical framework for raising institutional capital, he argues, but fund constraints, reserves and recycling rules can shape decisions independently of company quality. His examples are simplified illustrations of fund economics, not audited returns.

Hommels says he asks his investment advisory board for flexibility on per-company limits and believes an investor should take disproportionate risk when conviction is high. This is his preferred strategy, not a claim that concentration is suitable for every fund or investor.

He frames defense investments as deep technology with defense ministries as customers. Hommels argues that inexpensive autonomous systems can challenge far more costly equipment and that NATO members need technological sovereignty. His cost and effectiveness comparisons are illustrative claims from an investor in the sector, not demonstrated outcomes for every system.

He says European electorates need a clearer understanding of security risks after a long period of relying on a peace dividend. He questions dependence on private satellite connectivity and cites estimates of limited ammunition reserves and other military constraints. The interview does not independently verify these operational claims, and they should not be treated as precise current readiness assessments.

Hommels expects national and regional security interests to shape defense winners. He cites space infrastructure and launch access as areas where Europe needs more autonomy. He claims constraints on European launch availability, but the interview does not establish a verified six-year inability to launch satellites; that is his assessment at the time.

He worries Europe lacks a shared view of its priorities and the will to act on them. He agrees with the argument that Europe should shoulder more of its own defense costs. His figures for national spending and its allocation are estimates offered during the conversation.

Stebbings asks why politicians would limit defense spending if threats are rising. Hommels suggests voters have long assumed war was unlikely and therefore saw little benefit in spending more. He argues politicians must explain the trade-offs and says procurement incentives can favor established suppliers over unfamiliar startups.

Hommels discusses a study he commissioned and argues Germany could move toward spending 3.5% of GDP on defense. He estimates roughly €100 billion in additional annual spending and models potential economic and tax effects over several years. These are his scenario assumptions, not independently verified fiscal forecasts or a guarantee of defense readiness.

If US support were reduced, he says Europe would need its own capacity but could face supply constraints. He expects more attention to drones, electronic warfare and other technology. His spending scenarios use assumed shares of defense budgets and revenue multiples to suggest a large opportunity for deep-tech investors; they are illustrative market-sizing exercises, not realized company value or annual cash returns.

Very few European investors have close ties to defense ministries today, Hommels says. He considers the technical task similar to other deep-tech investing, but recognizes that the customer and procurement process are different. The ecosystem must build trust among startups, ministries and established defense primes that have rarely worked together.

He compares possible defense industry structures with pharmaceuticals: large incumbents may provide distribution and regulatory expertise while acquiring or partnering with innovators, or a few startups may become primes themselves. He says it is too early to know which model will dominate.

Defense startups may need larger financing rounds, including European growth capital, he says. His concern is that dependence on US investors can bring board influence and interests different from European strategic priorities. He also cites estimates of US and European defense research spending; those figures are his and are not verified in the interview.

Hommels warns that investors entering defense merely because it is easy to raise a fund could damage fragile relationships with government customers. Stebbings argues successful founders need a rare combination of product expertise, government sales and company leadership. Hommels agrees and says the NATO Innovation Fund aims to help connect financing, founders and ministries.

Stebbings asks why Hommels moved so quickly to invest in Neko Health. Hommels says he had known Daniel Ek for years and, when Ek considered opening the company to investors, flew to Stockholm, underwent a scan and issued a term sheet that evening. He is an investor in Neko, so his enthusiasm has a direct financial dimension.

His interest drew partly on his own experience with preventive examinations and tracking health measurements over time. He liked Neko’s product and saw a potentially large market. This is an investment thesis and personal experience; the interview does not establish the clinical benefits or appropriate use of any particular screening program.

Hommels says he is not especially price-sensitive: he would still buy companies he likes at a moderately higher valuation and would not buy unattractive ones simply because they were cheaper. He nevertheless wants a price that reflects founder ambition and execution. The view minimizes valuation sensitivity for exceptional outcomes; it does not eliminate price or downside risk.

Ownership should be large enough for being right to matter, he says, and to justify the time he spends helping a founder. He contrasts that with tiny positions spread across many companies. The discussion is about his investment approach, not a formula for all venture portfolios.

Hommels met Daniel Ek through an investment in Stardoll, where Ek was CTO; Ek later invited him to invest in Spotify. Stebbings notes that music rights made the company far from obvious at the time. Hommels says several of his best investments looked difficult early, including Skype before its business model was established.

He traces Airbnb to a conversation with Madonna’s manager Guy Oseary, who persuaded him of the opportunity. With Revolut, his team initially missed the company, but his son enthusiastically showed him the app at dinner. Hommels liked the product and asked the team to find a way onto its cap table.

Watching Friendster, Myspace and Facebook, he concluded that social networks could lose users when a new feature attracted them elsewhere. Facebook’s decision to introduce an API changed his thinking: outside innovation could use its network instead of building another. He called contacts in Silicon Valley and bought shares that Matt Cohler helped him obtain.

Many of these investments came from relationships or efforts outside a conventional fundraising round. Hommels says his instinct is to act when he wants an opportunity rather than wait. In India, he says he entered CRED with help from Shailendra Singh and had previously backed founder Kunal Shah.

Asked about his biggest loss, Hommels recalls Wonderloop, a cookie-based advertising company on which he worked with a friend for roughly three and a half years. He says it cost him 60% of his wealth and believes it was one or two years too early for the market. Those figures and the explanation are his recollection.

A relationship formed during that experience later led him to co-found a Turkish company he calls Markafoni, which he says was sold to Naspers for $150 million after about two and a half years. He sees the later outcome as more than offsetting the loss and draws a personal lesson about treating people well even when a deal fails.

Stebbings asks about selling winners too early. Hommels recalls entering King.com at a roughly 2.5 million valuation and selling at around 100 million rather than its later five-billion valuation. He says the decision was arguable at the time because Candy Crush did not yet exist, and he does not dwell on it; the numbers describe valuations, not his personal realized proceeds.

On raising ambitious children, Hommels says the family was not always affluent and describes consciously returning home around five or six, sharing dinner and homework, then resuming work after the children were in bed. He credits their mother’s contribution and says the children also received opportunities to learn about investing.

In the quick-fire round he praises investor Lee Fixel’s market-building work and Daniel Ek’s persistence, patience and ethics. He says Stebbings discloses Fixel as a 20VC limited partner. These are personal assessments, not independent evaluations.

Hommels says six or seven investments returned more than 100 times money, one around 1,000 times, and roughly six others 30–60 times. He does not give a full portfolio denominator, dates or a breakdown of realized versus unrealized returns, so these figures do not establish overall fund performance. He values founders’ expressions of gratitude more than the multiples.

He says difficult events can turn out well and apparently good ones can turn out badly, so he does not dwell on unmade decisions. An ambitious founder can still build in Europe, he argues, because family and life outside work also matter. His comments about work ethic and social attitudes are personal generalizations.

Hommels misses the freedom of angel investing, including the absence of fundraising and the ability to decide on his own schedule. A venture platform, however, can achieve things an individual angel cannot. He suggests different stages of a career may call for different approaches.

Asked whether Neko could become bigger than Spotify, he sees a high chance of a very large company because of the health market and the team’s execution. As a Neko investor and longtime Ek backer, he has a financial interest; this is an optimistic forecast, not evidence of future valuation or medical outcomes.

He wishes interviewers asked more about designing a satisfying life over a decade, not only short-term facts and success. He seeks advice from older friends about trade-offs and says happiness has many dimensions. His two reference points are making his eight-year-old self proud of what he achieved and his eighty-year-old self proud of his integrity toward colleagues, partner and family.