Defence tech has long been a bigger industry in the US than in Europe — but since Russia’s full-scale invasion of Ukraine in 2022, European investors and founders have been keen to create and back startups in the region.
Now, US investors like Lockheed Martin Ventures, the American aerospace and defence titan’s VC arm, are increasingly eyeing European startups as potential investments.
The intent is to do more investing in Europe, says Chris Moran, vice president and general manager at Lockheed Martin Ventures (LMV). LMV has advised the €1bn NATO Innovation Fund. “We’re getting to see more opportunities, and we will make those investments as we see fit,” Moran says.
With $400m earmarked for startup investments, LMV typically writes cheques of up to $5m into mostly seed and Series A companies across several tech areas, including spacetech and quantum. So far, LMV has invested in seven European companies, including Swiss weather intelligence company Meteomatics and British thermal imaging satellite startup SatVu.
Lockheed Martin may strategically acquire companies LMV invests in, Moran says, though it’s not common: “It’s not a strategy, but it’s not out of the question.” It’s more likely to partner with them, he says: “We’d love to buy from these companies to put this tech into the systems and platforms that we sell.”
What does LMV want from Europe?
LMV is looking into quantum, AI and autonomous systems startups — like drones — in particular.
“If you look under the hood at all the quantum companies, you’ll find European and primarily UK PI [principal investigator, or the person in charge of a research project grant] in there, which is amazing,” says Moran. He says academic institutions like the UK’s University of Bristol “create a lot of quantum expertise”.
Though LMV has yet to do a direct quantum investment in Europe, it is looking at doing some follow-on investments into startups backed by Amadeus Capital Partners, a London-based deeptech VC firm in which LMV is an LP.
Europe is ‘still trying to find its way’
LMV has been involved in helping bolster the European defence tech scene, Moran says: he helped write the NATO Innovation Fund’s charter and has been “very active” with the team.
“They are ferreting out really cool companies in the European theatre that we’d like to be involved with as well,” Moran says. “We’re starting to get involved with [NATO’s Diana startup accelerator], looking at the things that they’re looking at as well.”
Moran says he’s met with UK government officials to discuss the US’s innovation practices, and that the UK is training agencies to use methods like the Stanford University programme “Hacking for Defense”, a university course sponsored by the Department of Defence, which he’s been involved in. He says the UK is also interested in the approach of American nonprofit defence investor In-Q-Tel, which helps connect startups with government agency customers via work programmes. “The UK [Ministry of Defence] is trying to adopt that,” he says. “I’m very excited to see that.”
But like many observers, Moran believes Europe “is still trying to find its way” in the defence tech world. He points to European investors’ and governments’ hesitancy to go all in on defence-only startups versus hedging with dual use companies — those with both commercial and military applications.
Another problem is the disjointed nature of European markets.
European investors and companies have recently called for a unified market for startups to be able to operate across borders more easily. Moran also believes that would be a boon for defence startups.
“If NATO can unify those markets and allow sales of tech across that,” he says, “those opportunities become much bigger.”
Read the orginal article: https://sifted.eu/articles/lockheed-martin-ventures-invest-europe/
