TheChek News Flow

Tech investor Klaus Hommels targets defence start-ups in Europe

Founder of VC firm Lakestar plans to use more than €100mn of his own money in push to build region’s resilience

Veteran European tech investor Klaus Hommels said he would invest more than €100mn of his own money in defence start-ups, warning that it was clear even before Donald Trump’s re-election as US president that Europe needed to boost its resilience. 

The German founder of venture capital firm Lakestar, who was an early backer of companies including Spotify, Facebook and Revolut, said he was willing to invest a “nine-digit sum privately in defence . . . alongside [others]” to help bolster the region’s ability to defend itself.

Describing himself as an “emotional, mission-driven” entrepreneur, Hommels told the Financial Times: “We need to be more resilient, we need to build up capacity.”

Trump’s victory in the US presidential election has raised fears that the US will be much less willing to pay for Europe’s security. Although most countries have now met Nato’s designated target to spend 2 per cent of GDP on defence, experts expect the US to push for more.

It was “already clear from before that there is no way that you can keep on having that social romantic view that somebody else is bailing you out,” said Hommels, who also chairs the Nato-backed €1bn innovation venture capital fund. 

“We should as Europe have this self-esteem and the self-appreciation that we should be an independent self-governed continent with everything that belongs to it,” he added. “So the direction is pretty clear where it needs to go.”

Alongside investing via Lakestar, Hommels said he would “also invest considerably . . . my own money on it. I think it’s a fantastic risk-return profile but it also has a mission . . . You need to lead with conviction.”

European Nato partners are not doing enough to build a credible deterrence position and have scaled back defence spending 30 per cent since the 1990s, according to a new report by Lakestar on Europe’s capabilities. 

European leaders took an “overdose of tranquillisers” during peace time, Hommels said. 

According to Hommels, Europe has not been investing enough on fostering innovation at a time when military capabilities are changing rapidly due to the advance of technologies from drones to artificial intelligence. The research found that between 2011 and 2022, European governments allocated only about 4 per cent of their defence spending to research and development, compared with 14 per cent in the US. 

Europe also needed to ensure that it retained key capabilities, he said, with evidence that 40 per cent of growth capital for European ventures focused on “deep tech” — advanced technologies based on some form of substantial scientific or engineering innovation — coming from non-European investors.

“At some point if one motivation is sovereignty, then having the majority of the board not being European means at the end this company has no role to play in your own sovereignty,” he said.

Hommels said it was too early to say what type of companies he would invest in or what form an investment might take, and that Lakestar could also take part in any investments.

Venture investors, particularly in Europe, have long been wary of backing defence tech companies over ethical concerns but that has begun to change since Russia’s full-scale invasion of Ukraine in February 2022.

While some investors remain wary of backing purely defence-focused companies, there has been a shift in sentiment towards technologies deemed to be “dual use”, with both civil and military applications. 

“Everybody gets it. Everybody understands that this is something we should be engaging in,” said Hommels, while acknowledging that investors’ appetite would depend on the target. 

Among Lakestar’s existing investments is Auterion, a US-based company developing software for civil and military applications, including to power swarms of autonomous Ukrainian-made drones that can communicate with each other. Another one is Isar Aerospace, a satellite launch service provider. 

“This dual-use stuff will be the topic for the next 10 years because it is a sheer necessity, not a fashion,” said Hommels.

Trump team aims to bankrupt Iran with new ‘maximum pressure’ plan

President-elect wants to force Tehran to drop its nuclear programme and stop funding regional proxies

Donald Trump’s new administration will revive its “maximum pressure” policy to “bankrupt” Iran’s ability to fund regional proxies and develop nuclear weapons, according to people familiar with the transition.

Trump’s foreign policy team will seek to ratchet up sanctions on Tehran, including vital oil exports, as soon as the president-elect re-enters the White House in January, people familiar with the transition said.

“He’s determined to reinstitute a maximum pressure strategy to bankrupt Iran as soon as possible,” said a national security expert familiar with the Trump transition. 

The plan will mark a shift in US foreign policy at a time of turmoil in the Middle East after Hamas’s October 7 2023 attack triggered a wave of regional hostilities and thrust Israel’s shadow war with Iran into the open.

Trump signalled during his election campaign that he wants a deal with Iran. “We have to make a deal, because the consequences are impossible. We have to make a deal,” he said in September.

People familiar with Trump’s thinking said the maximum pressure tactic would be used to try to force Iran into talks with the US — although experts believe this is a long shot. 

The president-elect mounted a campaign of “maximum pressure” in his first term after abandoning the 2015 nuclear deal Iran signed with world powers, and imposing hundreds of sanctions on the Islamic republic.

In response, Tehran ramped up its nuclear activity and it is enriching uranium close to weapons-grade level.

The sanctions remained in place during the Biden administration, but analysts say it did not implement them as strictly as it sought to revive the nuclear accord with Iran and ease the crisis.

Iran’s crude oil exports have more than trebled in the past four years, from a low of 400,000 barrels a day in 2020 to more than 1.5mn b/d so far in 2024, with nearly all shipments going to China, according to the US Energy Information Agency. 

Trump’s transition team is drawing up executive orders that he could issue on his first day in the Oval Office to target Tehran, including to tighten and add new sanctions on Iranian oil exports, according to the people familiar with the plans.

“If they really go whole hog . . . they could knock Iran’s oil exports back to a few hundred thousand barrels per day,” said Bob McNally, president of consultancy Rapidan Energy and a former energy adviser to the George W Bush administration.

He added: “It’s their main source of earnings and their economy is already much more fragile than it was back then . . . they’re in a corner much worse than even the first term, it would be a pretty bad situation.”

Trump advisers have urged the incoming president to move quickly on Tehran, with one person familiar with the plan saying the new US leader would make clear “that we are going to treat Iran sanctions enforcement very seriously”. 

Mike Waltz, Trump’s incoming national security adviser, helped to pass legislation while he was a member of the House of Representatives that would impose secondary sanctions on Chinese purchases of Iranian crude. The bill has not passed the Senate.

The maximum pressure campaign is designed to deny Iran revenue to build up its military or fund proxy groups in the region, but ultimately the goal is to get Tehran to negotiate a new nuclear deal and change its regional policies, the people familiar with the transition said.

Iran backs militant groups across the region that have been firing at Israel over the past year. Israel and Iran have also traded direct missile attacks against each other.

“We’re hoping that it will be an incentive to get them to agree to negotiations in good faith that would stabilise relations and even someday normalise them, but I think Trump’s terms for that will be much tougher than the Iranians are ready for,” said the national security expert familiar with the transition.

The Trump campaign did not immediately respond to a request for comment.

Among Trump’s national security team are senior picks that include his nominee for secretary of state, Marco Rubio, and Waltz, the national security adviser, who have argued for a hawkish approach towards Iran.

“Just four years ago . . . their currency was tanking, they were truly on the back foot . . . we need to get back to that posture,” Waltz said during an October event at the Atlantic Council. 

Iranian foreign minister Abbas Araghchi this week urged the Trump team not to try maximum pressure again.

“Attempting ‘Maximum Pressure 2.0’ will only result in ‘Maximum Defeat 2.0’,” he said on X, referring to Iran’s nuclear advances in the years since Trump abandoned the accord. “Better idea: try ‘Maximum Wisdom’ — for the benefit of all.”

Iran’s new government, led by reformist President Masoud Pezeshkian, has said it wants to re-engage with the west on the nuclear stand-off, in a bid to secure sanctions relief to boost the country’s ailing economy.

After holding talks with Rafael Grossi, the head of the UN’s nuclear watchdog in Tehran on Thursday, Araghchi posted on X that Tehran was willing to negotiate “based on our national interest & our inalienable rights, but NOT ready to negotiate under pressure and intimidation!”

Even if both sides are willing to talk, chances of progress are slim.

“The big question is whether Ayatollah Khamenei would be willing to do a nuclear and regional deal with the man who killed Qassem Soleimani,” said Karim Sadjadpour, senior fellow at the Carnegie Endowment for International Peace.

“It’s tough to envision a nuclear or regional deal that would be acceptable to both the prime minister of Israel and the supreme leader of Iran,” he added.

Former Trump administration officials, including the president-elect, have faced increased threats from Iran since Trump ordered the assassination of top Iranian commander Qassem Soleimani in January 2020.

The Justice Department last week accused Iran’s government of hiring a man to set in motion plots to assassinate perceived enemies of the regime, including Trump. Iran has denied being involved in any plot to kill Trump.

A report in the New York Times that Elon Musk met Iran’s ambassador to the UN this week to discuss defusing tensions between the US and Iran raised expectations that Trump could be looking to do a deal with Tehran. The Iranian mission to the UN declined to comment.

A small biotech fund gets a boost from Wall Street titans

Catalio Capital has survived choppy years in the sector and returned more than $300mn to its limited partners

The list of investors backing little-known life sciences fund Catalio Capital reads like a roll call of private equity and hedge fund titans. Among them: Thoma Bravo’s Orlando Bravo, Brevan Howard’s Alan Howard, Stanley Druckenmiller and KKR’s Henry Kravis.

How a tiny biotech venture capital fund led by 33-year-old managing partner George Petrocheilos attracted such a kaleidoscope of finance luminaries is a story of equal parts hustle, chutzpah and connections.

It has not hurt that the father of Petrocheilos’s co-founder Jacob Vogelstein is a famed geneticist who has allowed his son’s firm to incubate companies bearing some of his most promising ideas in cancer treatment. Petrocheilos’s pater and mitera were also early-stage investors in Catalio, whose name is the Greek word for “catalyse,” or speed up.

Regardless of how Catalio amassed capital or marshalled resources, the firm’s work is paying off: It has returned more than $300mn to its limited partners in recent years, a rare feat in a tough market.

“This guy will call anybody — that’s the beauty about him,” Kravis said of Petrocheilos in an interview. “There is no one he won’t speak to. It is amazing how many people he has gotten to know over the years who adore him. They have given him money and they continue to give him more money.” KKR recently purchased a minority stake in the group, its first investment in an early-stage life sciences investing fund.

Led by its relentlessly networking Greek-born managing partner Petrocheilos and his co-founder Vogelstein, a scientist who met Petrocheilos while studying at Johns Hopkins University, Catalio has engineered 20 exits since it was founded four years ago. Its assets under management have topped $1.3bn, a speedy ascent in a sector that has struggled to attract new capital in recent years.

Vogelstein plays the role of the “quiet and smart” expert “digging into the science of investments”, while Petrocheilos is the networker and fundraiser with “more energy than an Energizer bunny,” according to Kravis, who serves as Catalio’s chair.

Catalio has managed to ride out a choppy few years in the biotech VC industry, in which firms have struggled against rising interest rates and a shortage of capital available to biotechnology companies spending heavily to develop products with uncertain financial prospects.

Petrocheilos was introduced to Kravis by KKR’s now co-chief executive Joseph Bae, who Petrocheilos first impressed over a 15-minute coffee as a university student. Bae offered an internship; instead Petrocheilos asked Bae to promise to have lunch with him once a year.

“I get many nos,” said Petrocheilos in an interview from Catalio’s office in New York’s Chelsea neighbourhood. “No today means no today, it doesn’t mean no tomorrow. Asking another time and another time is free.” Petrocheilos’s ambition has helped Catalio break into the clubby world of early-stage life science investing, which is dominated by venture capitalists in San Francisco and Cambridge, Massachusetts.

Alongside Petrocheilos’s hustle, Catalio’s other “secret sauce”, Kravis said, came from Vogelstein’s father, Bert, a famed Johns Hopkins researcher, who helped the firm assemble a roster of 45 leading scientists, including several Nobel Prize winners, to advise on potential investments.

The older Vogelstein’s laboratory has been the source of five of the 75 companies in which Catalio has invested, including its biggest exit to date: cancer diagnostics company Thrive, which was bought by Exact Sciences for up to $2.1bn. Vogelstein said he “never” expected to go into business with his son.

“Jacob obviously has the technical and scientific experience that George doesn’t,” said Vogelstein. “George has a large amount of contacts that he’s met, even though he’s young . . . that he has acquired both through his family and his own doing, which has been very valuable. They seem to be an ideal pair.”

Johns Hopkins has also proven to be a valuable network. The firm was first backed by Philippe Laffont, the billionaire founder of hedge fund Coatue Management and the father of a classmate of Petrocheilos and Vogelstein. Laffont, whose son briefly worked at Catalio, then made introductions across the hedge fund industry before eventually selling his stake.

KKR’s investment into Catalio is the latest in a succession of deals whereby private equity firms, including Blackstone, Apollo and Carlyle, which typically invest in large suppliers to the pharmaceutical industry, have bought stakes in biotech venture capital firms making riskier bets on novel treatments.

KKR’s Bae and his co-chief executive Scott Nuttall also have personal investments in the fund, alongside Druckenmiller, former Goldman Sachs chief executive Lloyd Blankfein and Greek basketball star Giannis Antetokounmpo.

Despite only 24 biotechs having listed this year across the whole sector, six of Catalio’s companies, including Arrivent Biopharma and Septerna Therapeutics, have floated. Catalio was also one of the first biotech funds to diversify into private credit, launching a fund co-led by Blankfein’s son Jonathan, an executive at the firm, that has generated annual returns of more than 20 per cent, according to investors.

With Kravis’s guidance, Petrocheilos has also assembled a “board of advisers” that includes major business figures who would not normally advise such a young fund. Members include Alex Gorsky, the former chief of Johnson & Johnson, and Dina Powell McCormick, an ultra-connected former top Goldman Sachs executive who is now a partner at BDT & MSD.

Petrocheilos predicts Catalio’s future may eventually look a lot more like a private equity firm in the healthcare sector, similar to KKR. “We would be open to all that stuff at one point,” said Petrocheilos. For Kravis, the similarities with his firm are impossible to miss: “They remind me of KKR in the early days: we didn’t think too far out, we just did deals.”

Resolution would move Iran-backed Hizbollah troops north of the Litani river and create multinational task force

Lebanon is studying a US-drafted ceasefire proposal which aims to halt the war between Israel and militant group Hizbollah, the country’s officials have said. 

A Lebanese government official said the US proposal was for an initial 60-day ceasefire and was based on Resolution 1701 — the UN Security Council resolution which ended the 2006 war between Israel and Hizbollah but was never properly implemented.

The resolution calls for the disarmament of the Iran-backed militant movement in areas south of the Litani river, which runs about 30km from Lebanon’s southern border, as well as the withdrawal of Israeli troops from Lebanese territory. 

The proposal, which was delivered to Beirut this week, does not include giving the Israeli military freedom of movement or permission for the deployment of foreign forces inside Lebanon, other than the UN peacekeepers who already patrol the Lebanon-Israel border, the official said. Lebanese officials had previously warned that Israeli freedom of movement was a non-starter for Beirut.

The omission of Israel’s demand to be able to unilaterally enforce a ceasefire means Lebanon may be more likely to agree to the new draft, although it is not clear if Israel has abandoned the requirement.

Officials in the region said Israeli interventions in case of non-compliance could be in a separate US-Israeli understanding.

On Friday Lebanon’s long-serving parliamentary speaker Nabih Berri, whose party is allied with Iran-backed Hizbollah, said in an interview with Saudi Arabian newspaper Al-Sharq Al-Awsat: “There can be no undermining of our sovereignty.”

Berri leads the Amal Movement which has close ties with Hizbollah, and he is considered to be negotiating on their behalf. 

“[Benjamin] Netanyahu resorts to force when he wants a concession,” Berri told Al-Sharq Al-Awsat on Friday. “But he doesn’t know who he is dealing with, and such actions don’t work with us.”

According to the Lebanese government official, the US proposal also includes a “special mechanism” for implementing Resolution 1701 involving a task force drawn from several countries to provide support to the Lebanese army, which according to the resolution is supposed to be the only armed force in Lebanese territory south of the Litani river other than the UN peacekeepers.

The countries which would participate in this task force have not been publicly identified but would be announced if the peace deal is signed, the official said.

Many Lebanese politicians remain deeply distrustful of Israel’s intentions and sceptical about the prospects for a ceasefire. Another Lebanese official said on Friday that the chances for reaching an agreement were “below zero”.

The FT cannot verify whether Berri’s public comments accurately reflect the latest draft proposal. The text of the agreement has not been made public, and Israeli officials have not officially commented on the contents of the proposal.

A person familiar with the Israeli government’s thinking said that Ron Dermer, Israeli strategic affairs minister and a close confidant of Netanyahu, had visited Moscow, Washington and US president-elect Donald Trump’s Florida residence Mar-a-Lago this week to discuss the terms of a possible ceasefire deal in Lebanon.

“Understandings were reached” with the administration of US President Joe Biden as well as Trump, the person added.

Israel had previously demanded that resolution 1701 be strengthened, and that it should be granted the right to use force if the agreement’s terms were violated.

Netanyahu said earlier this month that a deal would have to restrict Hizbollah to areas north of the Litani River, stop the group’s rearmament and allow Israel to “act vigorously” against any threat.

Israel has stepped up its attacks across Lebanon in recent days, including launching four waves of air strikes on Beirut’s southern suburbs on Friday.

Additional strikes were reported on Saturday in Dahiyeh, where Hizbollah’s headquarters are based. Israeli military officials have in recent days threatened to expand their ground offensive in south Lebanon.

Hizbollah began to fire rockets towards Israel after Hamas’ deadly attack on Israel on October 7 last year. As a consequence of the Hizbollah attacks 60,000 Israelis in the country’s north have been evacuated from the area, according to Israel’s government.

The Israeli military intensified its campaign against Hizbollah two months ago by blowing up thousands of pagers and walkie-talkies belonging to Hizbollah members, and ramping up air strikes. Two weeks later it began an invasion of southern Lebanon and pounded areas of south and east Lebanon dominated by Hizbollah. 

More than 1mn people have been forced to flee their homes and 3,445 people have been killed since October 8 last year, the majority in the last eight weeks, the Lebanese government has said. The health ministry also said Israeli strikes had killed more than 300 healthcare workers. 

Over 120 Israeli civilians and soldiers have been killed by Hizbollah’s fire in northern Israel and during the ground invasion of south Lebanon, according to Israel’s government.

Hizbollah has continued to fight on in south Lebanon and launches rockets, missiles and drones into Israel on a daily basis. But its leadership has been weakened as Israel has assassinated many of its top commanders and its leader Hassan Nasrallah. 

After a slow week last week, big rounds saw a good rebound with seven startups raising $100 million or more. While food delivery led the way, it also was a good week for aerospace, AI, biotech and defense.

1. Wonder, $250M, food delivery: Marc Lore’s food delivery startup Wonder can’t stay off this list. It was here in March, last November and in June 2022. It’s back this week as part of its $650 million acquisition of Grubhub, raising an additional $250 million in capital exclusively from new investors — which were not named. The deal price was a significant drop for Grubhub, which was bought by Just Eat Takeaway for $7.3 billion in 2021. Founded in 2018, Wonder has raised nearly $1.9 billion, per Crunchbase.

2. Metsera, $215M, biotech: It didn’t take Metsera long to get back on this list. It was just in April when the New York-based clinical-stage biopharmaceutical startup emerged from stealth with $290 million in funding led by Arch Venture Partners. This week the company is back after a $215 million Series B led by Venrock Healthcare Capital Partners and Wellington Management. The company is exploring medicines for obesity and metabolic diseases with a collection of oral and injectable incretin, nonincretin and combination therapies.

3. Writer, $200M, artificial intelligence: San Francisco-based Writer locked up a $200 million Series C that values the enterprise-focused generative AI platform at $1.9 billion. The new valuation is a nice uptick from the $500 million the company was valued at after a $100 million round led by Iconiq Growth last year. The new Series C was co-led by Iconiq, Premji Invest and Radical Ventures. Writer’s platform is designed to help businesses use large language models to improve workflows and offers AI solutions that can execute complex enterprise operations across systems and teams. The new cash will be used for the company’s quick-start AI applications and agents for workflows in healthcare, retail and financial services. Writer continues to grow its customer base, which includes names like Accenture, L’Oreal and Uber.

4. Firefly Aerospace, $175M, aerospace: Last year, Firefly Aerospace raised a $300 million Series C. The new cash values the company at $1.5 billion pre-money. The Cedar Park, Texas-based space transportation startup is back this week after closing a $175 million Series D led by RPM Ventures at a valuation of more than $2 billion. Firefly is getting set for its inaugural Blue Ghost mission to the moon as part of NASA’s Commercial Lunar Payload Service initiative. Founded in 2014, the company has raised $747 million, per Crunchbase.

5. Chaos Industries, $145M, defense: Defense and critical infrastructure tech startup Chaos Industries raised $145 million in a Series B led by Accel, becoming just the latest defense tech firm to see big cash from investors. The Los Angeles-based startup had previously raised a $70 million Series A led by 8VC last year. Chaos specializes in advanced detection, monitoring and communication solutions for the defense and commercial sectors. The company’s Vanquish radar provides early warning and tracking capabilities against unmanned aerial systems, missiles and aircraft. Chaos is not alone in raising a large round among funding to other defense tech startups. Just in the past three months, several defense tech startups have seen significant cash roll into their coffers. In late August, defense tech startup Parry Labs, which creates digital systems for the defense industry that include mission-critical software and advanced AI, completed an $80 million round led by Capitol Meridian Partners. In mid-September, self-driving technology company Forterra closed a $75 million Series B led by Hedosophia, Moore Strategic Ventures and XYZ Venture Capital.

6. Trace Neuroscience, $101M, biotech: South San Francisco, California-based Trace Neuroscience, which is developing treatments for amyotrophic lateral sclerosis, launched with a $101 million Series A led by Third Rock Ventures.

7. Radiant Industries, $100M, energy: Radiant Industries, which develops portable nuclear microreactors, raised a $100 million Series C funding round led by DCVC. Founded in 2019, El Sungundo, California-based Radiant has raised $160 million, per the company.

8. TRex Bio, $84M, biotech: South San Francisco, California-based TRex Bio, a biotechnology company looking to decode human tissue immune biology, locked up an $84 million Series B led by Delos Capital. Founded in 2018, the company has raised $169 million, per Crunchbase.

9. Beta Bionics, $60M, biotech: Beta Bionics, a biotech developing diabetes management solutions, closed a $60 million Series E led by new investor Wellington Management. Founded in 2015, the Irvine, California-based company has raised nearly $354 million, per Crunchbase.

10. ScaleOps, $58M, cloud: New York-based ScaleOps, a cloud resource management startup, locked up a $58 million Series B led by Lightspeed Venture Partners. Founded in 2022, ScaleOps says it has raised $80 million.

The biggest round of the week came from South America.