The European Investment Fund (EIF) will put €40 million into “early stage” defence tech companies through a venture capital fund, in the first defence-related investments from the decades-old EIF.
The investment, announced on Thursday, will back defence-focused startups through the Keen Venture Partners’ European defence and security tech fund.
The EIF, which is part of the European Investment Bank (EIB) Group, has long backed smaller European companies, but has historically avoided the defence industry.
That has shifted since Russia’s full-scale invasion of Ukraine, as EU leaders have sought to grow the European defence sector amid a broader push to rebuild European military capabilities.
The EIF previously announced €175 million in investments into so-called “dual use” innovations, technologies that have both civilian and military applications. As of 2024, the EIF had a total of €7.2 billion in various equity investments, in addition to loans, guarantees and other forms of investments.
The €40 million investment with the Keen Venture Partners fund is aimed at supporting startups that are “pioneering solutions” in the “defence and security technology sector”, according to an EIF press release.
That could include companies working on cybersecurity, robotics, artificial intelligence, autonomous systems and space technologies such as secure satellite communications, satellite image analysis and the protection of satellites, according to the EIF.
The fund will invest in companies operating in the EU as well as the United Kingdom, Turkey and Norway, the press release states.
The announcement highlights how the mindset of European investors has shifted since Russia’s full-scale invasion in February 2022, particularly as European governments have committed to massive increases in military spending.
Stocks for many European defence companies have surged, but executives have long complained that firms producing military gear have generally faced tougher conditions and discrimination when trying to raise cash from banks and other financial institutions.
In an attempt to drive more investment into the sector, the European Investment Bank has been shifting its lending rules to allow investments in companies that build military equipment, although producers of lethal weapons remain off-limits.
A number of banks in EU countries have following the EIB’s lead in easing lending conditions, and the European Commission is considering rewriting sustainable investment rules to drive more investment into the sector as well.
(bts)
