Latest news with #militaryinvestment
Yahoo
09-07-2025
- Business
- Yahoo
European VC breaks taboo by investing in pure defense tech from Ukraine's war zones
Defense tech has gone from a no-go zone for VCs to a hot investment sector. However, dual use — meaning that the technology must also have civilian applications — is still a requirement for most of them, including the NATO Innovation Fund. Estonian VC firm Darkstar breaks from this trend by sometimes investing in purely military applications, with the goal of helping rearm Europe using combat-proven solutions emerging from Ukraine. 'This is very critical, not only today but for the next 10 years,' said its cofounder and general partner Ragnar Sass (second from the left in the picture). The firm takes a hands-on approach to this mission, helping startups bring products to military customers both in Ukraine and throughout Europe. For Ukrainian teams, this means not just funding but also support with setting up compliant entities in NATO countries like Estonia. 'In any company which wants to be part of European procurement or even grants, the operational side has to be perfect,' Sass said. With a fundraising target of €25 million (approximately $29.2 million) in the next six to 12 months, Darkstar intends to focus on pre-seed and seed rounds, with a usual check size of €500k to €1 million. It has already made two investments: in Ukrainian-Estonian startups FarSight Vision, which specializes in geospatial analytics and 3D mapping for drone pilots, and Deftak, which develops ammunition for drones. For Sass, investing in weapons wasn't an obvious move. A key figure in the Estonian startup ecosystem ever since Skype's founders funded his first startup, a community for pet owners, he went on to co-found CRM and sales tool Pipedrive, and used the proceeds of that unicorn-sized exit to make more than 50 angel investments. Some of these investments became unicorns, too, including Veriff. But none of them were in defense, even after Russia's full-scale invasion of Ukraine in 2022 prompted Sass to deliver trucks and aid to Ukraine, to which he has personal and business ties. 'It took quite a long time mentally to understand that I want to be involved in weapon systems,' Sass said. He eventually made his choice a year and a half ago when Estonian drone startup Krattworks became his first defense investment. Krattworks marked a turning point for Sass; it was also his last investment as an angel investor. Sass is now putting his money into Darkstar, which started out as a coalition organizing hackathons and bootcamps, leveraging his decade-long experience at hackathon community Garage48 between 2010 and 2020. Since then, Sass went on to fund and sell another company, Salto X, although it is unclear whether he made money from that exit. Sass isn't the only one backing this approach. Darkstar just completed a first close of €15 million (approximately $17.5 million) backed by European entrepreneurs, family offices, and Estonian state-backed LP SmartCap, TechCrunch learned exclusively. Backing a fund like Darkstar makes SmartCap an exception as well, alongside Lithuania's sovereign VC fund Coinvest Capital, which became authorized to make defense investments without requiring civilian use cases in 2023. It's no coincidence that all of these come from the Baltics. Russia's proximity and the Soviet Union's former occupation give Estonians like Sass a sense of urgency that is now spreading across Europe as investors recognize the importance of defense. 'But if you don't have real know-how in that area, you're struggling,' Sass said. For Darkstar, building that know-how meant talking to end users from day one. In Darkstar's case, the end users are Ukraine's brigades. While some changes are being implemented, the country has adopted a decentralized approach, enabling combat units to make their own decisions. This can be hard to navigate for outsiders, but Sass got a head start. 'In the last three and a half years, I have been to Ukraine 20-plus times, and I have personally met 100-plus unit commanders — spent time with them, talked with them, learned from them,' said the entrepreneur, who also found a lot of common ground. 'Elite units are more similar to startups than we can imagine.' Although cheap first-person view (FPV) drones have been used to destroy equipment worth millions, Sass says that it would be a huge mistake to think that tech developments from Ukraine are easily copyable. There's sophistication — 'most elite drone battalions in Ukraine have their own R&D' — and there is velocity on both sides of the frontline. For instance, fiber-optic drones have been a game changer. For startups outside of Ukraine, it means that a solution that works on paper could become pointless, and that's where Darkstar's bootcamps are meant to help. The next one will take place this summer in Kyiv, and according to its website, will give companies 'feedback, field-testing opportunities and combat validation.' Some of Darkstar's deal flow will come from its bootcamps, where staff work hands-on with teams for five days. But the pipeline is broader, and Ukraine's 2,000 eligible teams stand out. 'Many of the Ukrainian companies we are looking at are not six months old; they have been around two-plus years and they have already managed to build a product and company with minimum capital.' General mobilization of Ukrainian men isn't as big an obstacle as often assumed. Founders building effective combat products can receive exemptions and travel approval, and a significant percentage of Ukraine's defense startup founders are women, including FarSight Vision CEO, Viktoriia Yaremchuk, Sass said. As for the restriction on defense tech exports out of Ukraine, that hurdle is in the process of being removed. Sass is applying a similar location philosophy to defense investing. Just as he once argued that 'early-stage Nordic startups should cut the crap and move to Silicon Valley,' Darkstar won't invest in companies that intend to stay based exclusively in Ukraine. It is also talking to teams based in Central and Eastern Europe, Latvia, the U.K. and Germany, among others. 'After a year or two, this [portfolio] will be a way more diverse and mixed group.' In alignment with this goal, Darkstar describes itself as pan-European in background. Sass is joined by Estonia-based GPs Kaspar Gering, who spent a decade at Wise in engineering and data science roles, and Mart Noorma, director of the NATO Cooperative Cyber Defence Centre of Excellence (on the left in the main picture). A fourth GP, Philip Jungen, is based in Germany, with another partner and additional staffers in Ukraine. As for categories, Darkstar plans to invest in autonomous systems, air defense, electromagnetic warfare, communications, cybersecurity, sensors, as well as surveillance and intelligence, both with single and dual uses. According to Sass, some of these could turn into acquisition targets for cash-rich prime contractors struggling to deliver the rapid solutions that NATO countries are now willing to buy from them. But fueled by governments coming to terms with how the war in Ukraine has transformed modern warfare, other startups could also reach hundreds of million in revenue on their own and even go public. It is unclear whether defense startups, particularly those without civilian applications, can achieve breakout success on their own. However, the rapid rise and valuation of companies like Anduril and Helsing along with a wave of new defense-focused funds, suggests that the prospect of venture-scale returns is being taken more seriously. Either way, what keeps Sass going is something bigger. Though he embraces the humor of NAFO, a global online movement leveraging memes to support Ukraine, Sass also delivers a sober warning about Russia's relentless war economy. 'The enemy is moving very fast, and that's exactly why I believe that we need to have the tech community being involved way more to address that huge and growing threat.'
Russia Today
07-07-2025
- Business
- Russia Today
NATO state issues warning over ramping up defense spending
EU nations risk 'increased debt levels and unsustainable finances' if they raise defense spending too quickly, Danish Economy Minister Stephanie Lose has warned. EU and NATO members are pushing to invest billions of euros in troops and weapons. NATO leaders agreed last month to increase the target for defense spending from 2% to 5% of GDP, with 3.5% allocated directly to the military and the remainder directed toward broader security initiatives. Brussels previously unveiled the €800 billion ($940 billion) 'ReArm Europe' program. Denmark is among 12 EU nations taking advantage of a special 'national escape clause', which allows them to bypass the EU's budget deficit rules when borrowing for military purposes. Lose told Euractiv that she does not fault countries such as France and Italy for opting out, in an interview published on Monday. 'It's good if you adhere to sound public finances... if it means that they're exploring ways to fulfill the 3.5% NATO goal without being on an unsustainable path,' she said, adding that if the reluctance indicates a lack of room to boost defense spending, 'then it's, of course, a problem.' Speaking ahead of an EU ministerial meeting that she is set to chair Monday – as Denmark currently holds the rotating presidency of the bloc – Lose cited US trade tariffs and competition from China as additional pressures limiting the EU's ability to increase military investment. European NATO members say they need to increase their defense budgets to deter the alleged threat from Russia, which has denied that it poses any threat to these countries, accusing Western officials of using fear to justify the budget increases, as well as the decline in the standard of living among their citizens. Western Europe's industrial competitiveness has fallen since EU leaders reduced Russian energy imports, which supported the region's industries for decades. The move was part of sanctions against Russia due to the Ukraine conflict. Russia considers the conflict to be a result of NATO expansion, saying the US-led military bloc presents a direct threat to national security.
New York Times
06-07-2025
- Business
- New York Times
Europe's Dilemma: Build a Military Industry or Keep Relying on the U.S.
European countries have committed to spending nearly double on military investments over the next decade, with high hopes that it will benefit their defense industries. But it is not clear that all that money — perhaps as much as 14 trillion euros, or $16 trillion — will fuel a flurry of high-end innovation in Europe. That is because of what one might call the F-35 problem. Europe lacks quality alternatives to some of the most needed and desired defense equipment that American companies produce. Among them is the F-35, Lockheed Martin's famed stealth fighter jet, whose advanced abilities are unmatched by European counterparts. Patriot missile-defense systems are also imported from America, as are rocket launchers, sophisticated drones, long-range artillery guided by satellite, integrated command and control systems, electronic and cyber warfare capabilities — along with most of the software required to run them. And because many European nations have already invested in American weapons, they want new purchases to remain compatible. The pledged investments have created a tension. Should European nations build their own military industry? Does the war in Ukraine and the threat of a militarized Russia allow that much lead-time? Or should they continue to invest, at least in part, in America's already available, cutting-edge technology? Want all of The Times? Subscribe.
Yahoo
25-06-2025
- Business
- Yahoo
NATO leaders agree to hike military spending and restate 'ironclad commitment' to collective defense
THE HAGUE, Netherlands (AP) — NATO leaders agreed on Wednesday on a massive hike in defense spending after pressure from U.S. President Donald Trump, and expressed their 'ironclad commitment' to come to each other's aid if attacked. The 32 leaders endorsed a final summit statement saying: 'Allies commit to invest 5% of GDP annually on core defense requirements as well as defense- and security-related spending by 2035 to ensure our individual and collective obligations.' Spain had already officially announced that it cannot meet the target, and others have voiced reservations, but the investment pledge includes a review of spending in 2029 to monitor progress and reassess the security threat posed by Russia. The leaders also underlined their 'ironclad commitment' to NATO's collective security guarantee – 'that an attack on one is an attack on all.' Ahead of the summit, Trump had again raised doubts over whether the United States would defend its allies. The show of unity vindicated NATO Secretary-General Mark Rutte's billing of the summit as 'transformational,' even though it papered over divisions. The spending pledge sets European allies and Canada on a steep path toward significant military investment. The spending hike requires each countries to spend billions of dollars. It comes as the United States — NATO's biggest-spending member — shifts its attention away from Europe to focus on security priorities elsewhere, notably in the Middle East and Indo-Pacific. But ahead of the meeting, Spain announced that it would not be able to reach the target by the new 2035 deadline, calling it 'unreasonable.' Belgium signaled that it would not get there either, and Slovakia said it reserves the right to decide its own defense spending. Many European countries face major economic challenges, and Trump's global tariff war could make it even harder for America's allies to reach their targets. Some countries are already squeezing welfare and foreign aid spending to channel extra funds into their military budgets. On Tuesday, Trump complained that 'there's a problem with Spain. Spain is not agreeing, which is very unfair to the rest of them, frankly.' He has also criticized Canada 'a low payer.' In 2018, a NATO summit during Trump's first term unraveled due to a dispute over defense spending. But Rutte conceded that 'these are difficult decisions. Let's be honest. I mean, politicians have to make choices in scarcity. And this is not easy.' But he said: 'given the threat from the Russians, given the international security situation, there is no alternative.' Russia's neighbors lead the pack in boosting spending Other countries closer to the borders of Russia and Ukraine — Poland, the three Baltic states and Nordic countries — have committed to the goal, as have NATO's European heavyweights Britain, France, Germany and the Netherlands. 'This is a big win, I think, for both President Trump and I think it's also a big win for Europe,' Finnish President Alexander Stubb told reporters. 'We're witnessing the birth of a new NATO, which means a more balanced NATO.' He said it would take nations 'back to the defense expenditure levels of the Cold War.' NATO countries started to cut their military budgets in safer times after the Berlin Wall collapsed in 1989. In a fresh take on Trump's MAGA movement, Lithuanian President Gitanas Nausėda said: 'We should choose a motto, 'make NATO great again.'' After Russia's full-scale invasion of Ukraine in 2022, the NATO allies agreed to make 2% of GDP the minimum spending level. Last year, 22 countries were expected to hit that target, up from just three a decade ago. In The Hague, the allies endorsed a major revamp of their spending targets. They upped the ante for what NATO calls 'core defense spending' to 3.5%, while changing how it's counted to include providing military support to Ukraine. To hit Trump's 5% demand, the deal set a second target of 1.5% of GDP for a broader range of defense-related spending, such as improving roads, bridges, ports and airfields so that armies can deploy more quickly, countering cyber and hybrid attack measures, or preparing societies to deal with future conflicts. Progress will be reviewed in 2029, after the next U.S. presidential elections. 'This declaration is historic. We are 32 allies supporting that ambition, which is huge,' said Norwegian Prime Minister Jonas Gahr Støre. 'We have been struggling to get above 2% and now we said 3.5%, which is necessary in order to reach our capabilities.' Earlier this month, NATO agreed individual purchasing targets for nations to stock up on weapons and military equipment to better defend Europe, the Arctic and the North Atlantic, as part of the U.S. push to ramp up security spending. US decision on forces in Europe expected in coming months Extra funds will also be needed should the Trump administration announce a draw-down of forces in Europe, where around 84,000 U.S. troops are based, leaving European allies to plug any security gaps. The Pentagon is expected to announce its intentions in coming months. Beyond Trump's demands, European allies and Canada have steeply ramped up defense spending out of concern about the threated posed by Russia. Several countries are concerned that Russia could carry out an attack on NATO territory by the end of the decade. Hungary is not one of them, though. 'I think Russia is not strong enough to represent a real threat to us. We are far stronger,' said Hungarian Prime Minister Viktor Orbán, fielding questions from reporters, leaning back with his hands thrust into his pockets. Orbán is considered Russian President Vladimir Putin's closest ally in Europe.
