European defence tech investor gets boost as geopolitical tensions persist

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One of Europe’s biggest venture capital firms focused on defence technology has raised more than €100mn towards its second fund, as investors continue to pour money into the nascent sector since Russia’s war in Ukraine.

Expeditions, founded in 2021 to invest in technology start-ups, said the fund was on track to close at €150mn by the end of the year and had the backing of European and US private investors and family offices, as well as institutional investors. Its first fund raised close to €15mn.

The Warsaw-based company’s fundraising shows investor appetite for European defence technology start-ups is undiminished more than three years after Russia’s full-scale invasion of Ukraine, and as US President Donald Trump has pushed the continent to take more responsibility for its security.

Mikolaj Firlej, general partner and co-founder of Expeditions, told the Financial Times that Europe did not have the “luxury of time or waiting on the sidelines” given the heightened geopolitical tensions.

He said a speech by US vice-president JD Vance at the Munich security conference this year had led to a “tremendous change” among investors willing to back European security and defence technology companies, amid concern that America’s commitment to Europe’s defence was under threat.

The “Munich conference was a bigger trigger than even the war in Ukraine”, Firlej said, adding there had also been a shift in the “quality of funders from native Europe” willing to back the sector.

Investors have responded to geopolitical tensions and the prospect of higher defence spending by pouring €1.4bn into Europe’s defence technology start-ups in the first seven months of this year. Since Russia’s full-scale invasion of Ukraine in February 2022, companies have raised €2.4bn, up from just €30mn in 2020 and €150mn in 2021.

Launched in 2021 by Firlej and his co-founder Stanislaw Kastory, Expeditions was one of the first European companies to invest in early-stage companies focused specifically on defence and security.

Its first fund has backed several start-ups, including anti-drone company Alpine Eagle, while the second one has invested in seven early-stage companies, such as Estonian start-up Lendurai.

Firlej said he welcomed the role the US capital could play in backing European funds, even as he stressed European self-reliance.

“We should have resilient funding run by Europeans for European companies, but if we can have strong relationships with the key US players . . . that is the right approach.”

He dismissed concerns that the recent rush of money into defence start-ups could cause a bubble even though some areas, such as that for military drones, were a “little bit overhyped”.

The sector, he said, was at an early stage and valuations were “much, much smaller” relative to those of the established contractors such as Rheinmetall, which has a €90bn market capitalisation.

“We can expect €2bn of invested capital by the end of this year. So a step change, but still the number is quite small because the starting point was almost zero.”