• In the past, European defence startups had to rely on US investors to grow, which meant capital, talent, and intellectual property often left Europe.
  • AVP and Earlybird have started E2D, a €500M growth fund that plans to invest about €25M each in around 20 European defence and dual-use tech companies.
  • The fund is launching as France, Germany, and the EU together commit over €1 trillion to defence spending, marking the biggest change in European security in a generation.

For years, starting a defence or dual-use tech company in Europe usually meant hearing the same thing: the best growth capital came from America. AVP and Earlybird want to change that.

Today, they launched E2D, a €500M growth fund focused on supporting European defence and dual-use tech companies and keeping their capital, talent, and intellectual property in Europe.

The fund plans to invest about €25M each in around 20 companies, with a team comprising people from both AVP and Earlybird. The first close is set for June 30, with support from major financial institutions and corporations as limited partners. A committee of military and industry leaders from NATO and top European contractors will help guide investment choices.

Why the money is finally moving

France has pledged €76B to defence, Germany €152B, and the EU has set out an €800B European defence plan, making this the biggest change in European security spending in a generation.

Still, until recently, most institutional investors avoided defence. Restrictions on venture capital have only recently begun to ease, creating a gap between political goals and available growth funding.

E2D aims to fill that gap. It will invest in technology companies operating in space, air, land, sea, and underwater, focusing on what it calls “modern operating models.” In other words, fast-moving startups rather than traditional defence giants. The goal is to close capability gaps in Europe and build companies that can succeed in both defence and commercial markets.

The team that’s been doing this before it was fashionable

AVP manages over €2.5B in venture and growth funds and has supported more than 60 tech companies since 2016. Meanwhile, Earlybird, founded in 1997, also manages €2.5B and has achieved nine IPOs and 41 trade sales over almost thirty years of deep tech investing in Europe.

Both firms say their teams have worked in defence and dual-use technology for more than a decade, long before most European funds focused on the sector.

“European defence is at a historic turning point, requiring a new generation of technology champions to safeguard sovereignty. The best European defence companies need investors who bring real sector conviction and pan-European reach; that’s exactly what this partnership delivers,” says Benoit Fosseprez, general partner at AVP.

“We look forward to backing the best European high-growth, deep tech companies that will be instrumental in closing defence capability gaps while also addressing commercial markets, delivering decisive and persistent operational gains to European armed forces as well as primes. This will foster a more resilient and sovereign European ecosystem and ultimately unlock superior value for investors,” adds Roland Manger, co-founder of Earlybird.

A growing but still underfunded field

E2D is entering a sector that has gained significant momentum. The NATO Innovation Fund, which raised €1B in 2022, has been one of the most active investors in European dual-use tech.

Plural and Atlantic Bridge have also entered the field. However, large growth-stage funds like E2D remain rare, and the gap between early-stage investments and the funding required to grow a defence tech company to prime-level contracts remains a major challenge in Europe.

It remains unclear whether €500M will be enough to change the situation. What is certain is that the political opportunity to build European defence sovereignty, and the willingness of investors to support it, will not last forever.