NATO said Tuesday it has closed on a 1 billion euro ($1.1 billion) fund to back startups working on defense and security technology that would benefit the military alliance. The fund is the first of its kind — a multicountry venture fund that will invest in defense-related startups to support its member nations — and comes as Russia’s war in Ukraine continues to rage, with NATO countries providing intense support to Kyiv.
Twenty-three NATO member countries are limited partners in the fund. That includes Sweden, which is pursuing membership in the alliance. The NATO Innovation Fund will make direct investments into startups, as well as provide capital to venture funds that invest in such startups.
Notably, the U.S. is not one of the member nations backing the NATO fund, which appears to be somewhat modeled after In-Q-Tel, a venture firm that works with the CIA to back startups.
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“With a 15-year timeframe, the NATO Innovation Fund will help bring to life those nascent technologies that have the power to transform our security in the decades to come, strengthening the Alliance’s innovation ecosystem and bolstering the security of our one billion citizens,” NATO Secretary General Jens Stoltenberg said when announcing the fund last year.
Defense tech overall still receives relatively paltry sums of venture funding. Less than $1.9 billion was raised by national security-related startups last year, Crunchbase data shows, and the vast majority of that was in a single round: $1.48 billion to Anduril Industries, a defense tech startup founded by Oculus founder Palmer Luckey.
In 2021, a record year for venture funding, venture investors globally spent just $870 million on national security startups, Crunchbase data shows.
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