The NATO Innovation Fund (NIF) — the €1bn vehicle backed by 24 NATO allies to invest in defence and deeptech startups and investors — has recently seen some turmoil at the top. In the last several months, two of its five founding partners left the fund, just about a year after it launched.
Despite the departure of Thorsten Claus, NIF’s former head of fund-of-funds, the firm’s VC investment strategy “hasn’t really changed,” partner Patrick Schneider-Sikorsky tells Sifted. It’s still looking for deeptech-focused investors who are keen to fund startups in NATO countries.
Since NIF started investing about a year ago, the firm has received “hundreds” of pitches from GPs, says Amalia Kontesi, NIF’s head of communications.
Chris O’Connor, the NIF partner currently leading the fund-of-funds strategy, said NIF wants to keep “an aggressive pace of fund-of-fund investments consistent with what we’ve done so far.” To date, NIF has announced six fund investments, including Central Eastern Europe (CEE)-focused deeptech firm OTB Ventures, German deeptech investor Vsquared Ventures, space-focused firm Alpine Space Ventures and, most recently, Baltics-based BSV Ventures. Kontesi says that the firm is “looking for the best talent” to hire more partners but can’t share anything at the moment.
2025’s wish list
Heading into 2025, the team’s on the hunt for fund managers that tick a few boxes: those who are specialised in a particular area (be it quantum or space, or generally defence), and, in particular, in areas like Southern Europe, the Baltics, CEE and the Nordics — regions where there is a lack of deeptech VC. Schneider-Sikorsky adds that they’re seeing “very healthy” deal flow at the moment.
While there are still attractive funds in more “developed” deeptech hotspots like Germany and the UK, he says “the overall theme is, we want to build capacity”; creating more long-term access to capital for specific technologies and regions that are underserved but important for NATO. “We want to crowd more capital into those ecosystems.”
Another hotspot? The Mediterranean, says Schneider-Sikorsky, adding that there are a few funds “that are advanced in our pipeline” in that region.
That includes investors who are just getting their start. “We would invest in first-time managers that brought something very specific,” says Schneider-Sikorsky. He says there are regions where there aren’t many experienced GPs but there are “really rock star angel investors, or groups of angel investors” who’ve invested or co-invested in good companies — albeit not on an institutional level. “NIF wants to actually support those investors.” He says the team has “a lot” of first-time GPs in the pipeline right now.
The NIF will also consider former founders looking to get into VC as prospective candidates for its cheques.
‘A lot more’ deeptech funds in 2025
There’s been more interest in defence-focused funds from GPs, says Schneider-Sikorsky, but from a very low starting level. Elsewhere, he expects more generalist VCs will eye deeptech in the coming year.
“Some of them have done one or two investments in the space, and I wouldn’t be surprised if people start actually trying to raise fully fresh funds focused on deeptech,” he says. “We’re going to see a lot more.”
Read the orginal article: https://sifted.eu/articles/vc-nato-innovation-fund-invest-2025/
