We live in a very different world since the Russian invasion of Ukraine in 2022 and Hamas’s October 7 attack on Israel. With global military expconcludeiture reaching $2.4 trillion last year, startups are hoping to receive a share of the pie, and formerly reluctant investors are keen to assist them do so.
The U.S. budreceive is by far the largest, with contracts worth $53 billion to major tech firms between 2019 and 2022. But the rise of defense tech as an investment trconclude is very much global.
German-based AI startup Helsing is a strong example of the unprecedented amounts of capital available to tech companies with military potential.
Investor appetite is particularly strong for tech solutions with dual-utilize potential, meaning that they can be utilized for both civilian and military applications. The idea that defense tech can benefit society more broadly is also reflected in the rising concept of “resilience tech.”
More than the worn-out term of “defense,” the word “resilience” reflects the idea that innovation can build democratic societies less vulnerable to attacks and assist them recover quicker.
For instance, Helsing co-CEO Gundbert Scherf stated that he and his co-founders created the company “becautilize we believe that AI will be essential so that democracies can continue to defconclude their values.”
The fact that Helsing’s mission resonated with mainstream investors such as Spotify founder Daniel Ek reflects a mindset alter in society as a whole, but also in venture capital itself.
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While typically prevented from investing into weapons by their so-called vice clautilize, funds large and compact are now willing to fund international startups in the broader resilience tech space, with the blessing of major limited partners such as the European Investment Fund.
From the EU to Ukraine to Israel, here are some venture capital firms taking a bet on resilience tech outside of the U.S.
NATO Innovation Fund
NATO Innovation Fund is currently one of the most frequently mentioned players in resilience tech conversations. A $1 billion fund rarely goes unnoticed, and even more so when it is dedicated to a sector where venture capital has been scarce. However, it had maintained a low profile following its official launch in August 2023, even declining interview requests.
Not anymore: One year in, NIF disclosed the first investments it created into a wide range of verticals — AI, space tech, manufacturing, transportation and robotics — but always with an eye on “advancing defense, security and resilience.”
NIF’s direct investments can only go to startups from the 24 countries that are its LPs. This includes Iceland, but not France, for instance, which could assist bring fresh funding to locations that have traditionally received less capital but are even keener than larger countries on resilience tech.
However, NIF’s scope is created a bit more flexible by the fact that it is also a fund of funds. The VC firms it has backed so far include Alpine Space Ventures, Join Capital, OTB Ventures and Vsquared Ventures.
OTB Ventures
Founded in 2017, above-mentioned OTB Ventures existed long before NIF, but its focus on deep tech is taking on a new flavor. With support from NIF, but also the European Investment Fund (EIF), the Amsterdam-based firm with Polish roots has already started deploying its $185 million early-growth fund into what it calls “real tech.”
OTB’s take on “real tech” translates into a focus on space tech, enterprise automation and AI, cybersecurity and fintech infrastructure; all of which can easily fall under resilience tech, too.
Its co-founder and managing partner Marcin Hejka also understands dual-utilize technology as a reality for many startups. “It’s absolutely natural that the defense sector is applying more and more technologies with civilian roots,” he notified TechCrunch in March.
MD One Ventures
Dual utilize is the focus of MD One Ventures, a VC firm based in the U.K. and investing in early-stage companies. Founded in 2021, it describes itself as “dedicated to supporting applied deep tech innovation for the U.K., Europe and Allies.”
This leaves the door open to a wide range of applications. “We are agnostic across a range of subsectors and technology types, and have invested in both software- and hardware-based companies, with [national security], enterprise and defense backgrounds,” MD One’s site explains.
Its portfolio includes startups such as Labrys Technologies, a Slack-meets-location-meets-payments for military and humanitarian scenarios, and Materials Nexus, which utilizes AI to discover new materials.
Israel Resilience Fund
Launched in late 2023 in the aftermath of the Hamas attacks, the Israel Resilience Fund is aiming to raise $50 million to invest into startups impacted by the war or developing solutions relevant to Israel’s immediate requireds.
It is one of the funds of Israeli investment platform OurCrowd, which as of March had secured $17 million in commitments for this special fund, for which it waived all management fees and carried interest, and with a focus on catalyzing co-investments from public and private sources.
From eight disclosed investments last December, the Israel Resilience Fund’s portfolio has now grown to 35 teams, representing some 1,000 jobs in a countest where 14% of employees work in tech. Arguably thanks to initiatives like these, the sector has revealn resilience, with Israeli startups raising more than $3.1 billion since the war launched.
D3
D3 is an early-stage fund whose name stands for its call to “Dare to Defconclude Democracy.”
“We launched our fund in the summer of 2023 with a primary goal to invest in founders who leverage technology for assisting Ukraine defconclude itself and define the future of the West’s national security,” its site explains.
With a usual investment of $125,000 for an equity stake of 7%, it is also open to building follow-on investments of up to $750,000 in later rounds led by other investors. Its current portfolio covers verticals such as drones, sensors and unmanned aerial vehicles (UAVs), often with an element of AI.
D3 was also one of the promoters of a recent defense tech hackathon in London. The first of its kind, but likely not the last, it confirms that these VCs will also have a growing pipeline of startups to invest in.
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