The terms and conditions of the one hundred million euro defense fund opened by the state-owned fund management company Smart Cap were introduced.
The fund's goal is to invest in the development of military or dual-use products and technology (including lethal ones).
According to Sille Pettai, head of SmartCap, the defense fund aims to create a prerequisite for the development of the defense industry through equity investments in companies that develop solutions in the field of national defense and security.
Investments will be made in both companies and funds together with private investors in order to make defense financing more attractive to private investors through risk sharing. It should also send a signal to entrepreneurs that the development of defense technology and increasing the volume and export capacity of the defense industry are strategically important for the country.
The defense fund invests primarily in Estonian companies, but investments in companies in NATO countries are also possible if Estonia is interested in doing so. However, Estonian companies and private sector funds with a strong Estonian presence are preferred in the transaction flow. The size of the investments is up to ten million euros per company and up to 20 million per fund.
“One of the government’s priorities is the development of Estonia’s own defence industry, which is part of ensuring national security and improving the competitiveness of the economy. The open Defence Fund creates a strong foundation for this,” said Minister of Economic Affairs and Industry Erkki Keldo.
“In addition to being one of the largest industrial growth plans in the country’s history, the Defence Fund is also a trend-setter in Europe. There is a growing need for raising capital for the development of dual-use technologies in other countries as well,” he noted.
The Defence Fund makes direct investments in seed, early-stage and growth-stage defence industry companies that develop or produce military and dual-use products and technologies. In addition, new defence-focused venture capital and private equity funds will be launched through fund investments to increase and diversify the supply of capital in the defence sector.
Kalev Koidumäe, Head of the Defence and Space Industry Association, said that the new fund will provide a significant boost to the development of Estonian defence industry companies. “Attracting additional capital provides new opportunities for the development of new innovative products in the field of defense and security, which creates additional jobs and stimulates the economy. The creation of a defense fund is an important component in the defense industry ecosystem, which also makes our business environment more attractive to foreign companies and investors,” he explained.
In addition, a chip competence center will be launched in April, which will create the ability to design chips for defense industry companies and otherwise support them with electronics challenges. A Ukrainian support measure has also been created for the purchase of products or services that are suitable for use by the Ukrainian defense forces in times of crisis and war. The establishment of a defense industrial park is also part of the ecosystem.
According to Sille Pettai, head of SmartCap, the defense fund aims to create a prerequisite for the development of the defense industry through equity investments in companies that develop solutions in the field of national defense and security.
Investments will be made in both companies and funds together with private investors in order to make defense financing more attractive to private investors through risk sharing. It should also send a signal to entrepreneurs that the development of defense technology and increasing the volume and export capacity of the defense industry are strategically important for the country.
The defense fund invests primarily in Estonian companies, but investments in companies in NATO countries are also possible if Estonia is interested in doing so. However, Estonian companies and private sector funds with a strong Estonian presence are preferred in the transaction flow. The size of the investments is up to ten million euros per company and up to 20 million per fund.
“One of the government’s priorities is the development of Estonia’s own defence industry, which is part of ensuring national security and improving the competitiveness of the economy. The open Defence Fund creates a strong foundation for this,” said Minister of Economic Affairs and Industry Erkki Keldo.
“In addition to being one of the largest industrial growth plans in the country’s history, the Defence Fund is also a trend-setter in Europe. There is a growing need for raising capital for the development of dual-use technologies in other countries as well,” he noted.
The Defence Fund makes direct investments in seed, early-stage and growth-stage defence industry companies that develop or produce military and dual-use products and technologies. In addition, new defence-focused venture capital and private equity funds will be launched through fund investments to increase and diversify the supply of capital in the defence sector.
Kalev Koidumäe, Head of the Defence and Space Industry Association, said that the new fund will provide a significant boost to the development of Estonian defence industry companies. “Attracting additional capital provides new opportunities for the development of new innovative products in the field of defense and security, which creates additional jobs and stimulates the economy. The creation of a defense fund is an important component in the defense industry ecosystem, which also makes our business environment more attractive to foreign companies and investors,” he explained.
In addition, a chip competence center will be launched in April, which will create the ability to design chips for defense industry companies and otherwise support them with electronics challenges. A Ukrainian support measure has also been created for the purchase of products or services that are suitable for use by the Ukrainian defense forces in times of crisis and war. The establishment of a defense industrial park is also part of the ecosystem.
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