Nato allies' €1bn fund for defence startups suffers early casualties

A €1bn venture capital (VC) fund to invest in defence startups and backed by Nato allies has lost four of its five founding partners, as well as its chair, in the past 18 months.

- Barney Macintyre

Even in the fast-moving world of venture capital, that’s a high turnover. But the Nato Innovation Fund (NIF) is no ordinary investor. It’s a first of its kind, multi-state fund set up in the wake of the invasion of Ukraine to boost early-stage funding for “dual use” technologies, civil and military.

So far, it has made 14 direct equity investments in startups including Wales-based Space Forge, which is exploring making advanced materials in orbit; Kraken, a manufacturer of drone boats; and Isar Aerospace, a German company seeking to challenge SpaceX in Europe.

Two dozen Nato allies are limited partners in the NIF, meaning they each contribute taxpayer cash but don't run the business of investing day to day. That’s done by a standalone, privately owned, for-profit VC fund overseen by a supervisory board.