In a sign of the times, the European Investment Fund (EIF), has backed its first defence tech fund.
Defence, once off-limits to the majority of European investors and LPs, is rapidly becoming one of the hottest areas of investment in the continent as geopolitical tensions push the industry to the front of policymakers, founders and VCs’ minds. Europe now has a handful of defence tech unicorns, including drone makers Quantum Systems and Helsing, and an increasing amount of capital to invest in them — from the flagship €1bn Nato Innovation Fund to a crowd of smaller defence and dual-use funds.
Governments are leaning in: the UK promised to invest £400m in defence tech in March, days after the EU unveiled an €800bn plan to rearm the continent. Dozens of defence tech startups have also landed deals with European governments.
The EIF, Europe’s largest LP, has committed €40m to a new defence, security and space tech-focused fund from Keen Ventures Partners, an Amsterdam-based VC firm. It’s the first investment from the EIF’s €175m Defence Equity Facility, which was announced at the start of 2024 — and a sign of more to come this summer, the EIF tells Sifted.
“[Security] is something the EIF, along with other partners, should be investing in with a stronger focus,” Marjut Falkstedt, the EIF’s CEO, told Sifted in April.
Defence in the spotlight
Keen has previously raised two more generalist funds focused on startups at Series A and B. It hopes to raise €125m for the new defence-focused fund, which is yet to do a first close. It will invest in around 20 to 25 European startups from seed to Series B, working in areas such as cyber defence, robotics, AI, autonomous systems and spacetech.
“Europe’s security can no longer rely on legacy systems or distant allies alone. Now is the time to back our own entrepreneurs building the next generation of defence technologies. Raising dedicated defence funds is not just a strategic imperative — it’s an economic and geopolitical opportunity to shape a stronger, more sovereign Europe,” Giuseppe Lacerenza, partner at Keen, tells Sifted.
The firm has assembled a 13-person advisory board for the new fund, including Jaap de Hoop Scheffer, former secretary general of NATO and Kajsa Ollongren, former Dutch minister of defence and deputy prime minister, along with a host of former military officers and defence industry veterans.
It plans to raise further funding from institutional investors, corporates active in the defence sector, high-net worth individuals and family offices.
Keen joins a flock of investors raising new funds focused on defence, including solo GP Nicola Sinclair’s Twin Track Ventures, solo GP Eric Slesinger’s 201 Ventures and Kyiv-based early-stage defence tech fund D3.
Experienced entrepreneurs from a raft of ‘mainstream’ sectors are also moving into defence tech. Florian Fournier, cofounder of French HR tech company PayFit, is now building a new startup, Orasio, which does AI-powered video intelligence for security.
Meanwhile, Sifted recently revealed how French AI startup Mistral had been pursuing defence contracts across Europe, pitching the potential military applications of its proprietary large language models (LLMs) and partnering with German industry leader Helsing.
Read the orginal article: https://sifted.eu/articles/eif-first-defence-tech-fund/
