We live in a completely different world since the Russian invasion of Ukraine in 2022 and the Hamas attack on Israel on October 7. Global military spending has plateaued $2.4 trillion Last 12 months, startups were hoping for a share of that pie, and previously reluctant investors are desperate to help them get there.
The US budget is by far the largest, with contracts value $53 billion to large technology corporations in 2019–2022. However, the growth of defense technologies as an investment trend is global.
German AI startup Helsing is a good example unprecedented amounts of capital available to technology corporations with military potential.
Investor appetite is particularly strong for technology solutions with dual-use potential, meaning they might be used for each civilian and military applications. The concept that defense technology can bring broader advantages to society is also reflected in the growing concept of “resilience technology.”
The word “resilience,” reasonably than the worn-out term “defense,” reflects the concept that innovation can make democratic societies less vulnerable to attack and help them recuperate more quickly.
For example, the co-CEO of Helsing Gundbert Scherf he said that he and his co-founders created the company “because we believe artificial intelligence will be essential for democracies to continue to defend their values.”
The incontrovertible fact that Helsing’s mission has resonated with mainstream investors like Spotify founder Daniel Ek reflects a shift in considering in society as a whole, but also in enterprise capital itself.
While the so-called Vice Presidential Provision typically prevents them from investing in weapons, funds large and small are now willing to fund international startups in the broader resilience-related technology space, with the blessing of major limited partners equivalent to European Investment Fund.
From the EU to Ukraine and Israel, here are some enterprise capital firms that are betting on resilience technologies outside the United States
NATO Innovation Fund
NATO Innovation Fund is now one of the most talked-about players in conversations about resilience technology. The billion-dollar fund rarely goes unnoticed, especially when it’s dedicated to a sector where enterprise capital has been scarce. But after its official launch in August 2023, it has kept a low profile, even declining interview requests.
Not anymore: One 12 months later, NIF revealed the first investments it had made across a wide selection of industries – artificial intelligence, space technology, manufacturing, transportation and robotics – but at all times with an eye to “advancing defense, security and resilience.”
Direct NIF investments can only be intended for startups with 24 countries these are his LPs. This is the case in Iceland, for example, but not in France, which could help provide latest financing to locations that have traditionally received less capital but are much more interested in resilience technologies than larger countries.
However, the scope of the NIF is barely more flexible resulting from the incontrovertible fact that it is also a fund of funds. The VC corporations he has supported so far include: Alpine space ventures, Join the capitalOTB Ventures and Vsquared Projects.
OTB ventures
Founded in 2017, mentioned above OTB ventures existed long before NIF, but its focus on deep tech is taking on a latest twist. With support from NIF, but also from the European Investment Fund (EIF), the Amsterdam-based company with Polish roots has already began deploying its $185 million early-stage fund into what it calls “real technology.”
OTB’s “real technology” approach translates into a focus on space technologies, enterprise automation and AI, cybersecurity, and fintech infrastructure; all of which is also easily amenable to resilience technology.
Its co-founder and managing partner Marcin Hejka also understands dual-use technology as a reality for many startups. “It’s absolutely natural that the defense sector is adopting more and more technologies with civilian roots,” he told TechCrunch in March.
MD One Projects
Dual use is in the highlight M.D. One VenturesVC company based in Great Britain, investing in corporations at an early stage of development. Founded in 2021, it describes itself as “dedicated to supporting applied deep technology innovation for the UK, Europe and allies.”
This leaves the door open to a wide selection of applications. “We are agnostic to a range of sub-sectors and technology types, and have invested in both software and hardware-based companies, [national security]“, entrepreneurship and defense,” explains the MD One website.
Its portfolio includes startups equivalent to Labrys Technologies, which mixes Slack, location and payments for military and humanitarian scenarios, and Materials Nexus, which uses artificial intelligence to find latest materials.
Israel Resilience Fund
Launched in late 2023 in the wake of Hamas attacks Israel Resilience Fund intends to boost $50 million to be invested in startups affected by the war or developing solutions that address Israel’s current needs.
This is one of the funds of the Israeli investment platform OurCrowd, which he has owned since March liabilities in the amount of USD 17 million were secured for this special fund that waives all management fees and accrues interest, focusing on catalyzing co-investments from public and private sources.
From 8 investments disclosed in December last 12 months, the Israel Resilience Fund portfolio has grown to 35 teams representing around 1,000 jobs in the country where 14% of employees work in the technology industry. It is likely through such initiatives that the sector has shown resilience, due to the rise of Israeli start-ups over $3.1 billion since the starting of the war.
D3
D3 is an early-stage fund named after the rallying cry, “Dare to defend democracy.”
“We launched our fund in the summer of 2023 with the primary goal of investing in founders who are leveraging technology to help Ukraine defend and define the future of Western national security,” the website explains.
With a typical investment of $125,000 for a 7% equity stake, the company is also open to creating additional investments of as much as $750,000 in later rounds led by other investors. Its current portfolio includes industries equivalent to drones, sensors, unmanned aerial vehicles (UAVs), often with an AI component.
D3 was also one of the organizers of a recent defense tech hackathon in London, the first of its kind but likely not the last, confirming that these VCs can even have a growing pool of startups to speculate in.