Lakestar will look to early funding rounds in London, Berlin and Zurich.
An early investor in Spotify, Skype and Facebook set up a £245m venture capital fund on Monday to focus on Europe, as the continent’s technology sector continues to rise.
Lakestar, whose last major fund in 2013 was worth £96m, will look to compete with the likes of Atomico, Index Ventures and Accel Partners, with business running out of offices in London, Berlin and Zurich.
As a priority the fund will target early stages of investment, particularly Series A funding rounds raising between £30,000 and £30m.
Klaus Hommels, chair of Lakestar, said: "The European technology market is continuing to boom. We’re seeing high-quality investment opportunities in tech, in a venture capital ecosystem that has materially improved and is increasingly producing billion-dollar companies.
"We’re also seeing a shift in the way the most promising companies access funding – rather than going public, major players are seeking private funding later in their development, providing opportunities for follow-on investments in strong performers."
Europe’s market for technology investment has often lurked in the shadow of Silicon Valley in the US, which is now regularly creating multibillion-dollar start-ups, known as "unicorns" in industry parlance.
However venture capitalists are looking at Europe as an emerging region for technology investment, the Swedish firm Spotify having been valued at $8bn (£5.1bn) in a June funding round.
Earlier this month Rob Kniaz, a partner at Hoxton Ventures, told CBR: "Europe has always had a technology scene but it’s always been smaller because it’s harder to build big companies here."
He pointed at a lack of cohesion between national regulation in Europe as one of the reasons firms find it harder to scale, despite pressure from within the EU to create a Digital Single Market.