Changes in the geopolitical landscape and the potential impacts of the"ReArm Europe" Plan are opening new opportunities for Europe's Aerospace and Defence Industry.

To fully exploit these opportunities, however, a significant structural challenge needs to be addressed. While “traditional” defence industries remain structured around long-term programs, the rapid digital acceleration of the past two decades has created a two-speed system:

- On one hand, frontier innovation continues in complex, large-scale programs;

- On the other, there's an urgent need to rapidly integrate commercially-developed technologies into the defence sector.

Major defence corporations struggle to adapt quickly to this new scenario. Additionally, the significant increase in military spending potentially creates a bottleneck effect: European companies are already operating at high capacity, unable to scale rapidly due to substantial order backlogs.

In this evolving context, investment funds have a critical role to play. A prime example is the recently launched fund by Keen Venture Partners, with a target size of €125 million and a first closing scheduled for June 2025, open to institutional, corporate, and private investors. The fund specializes in dual-use technologies, which are developed for military applications but have civilian uses—or vice versa. Its areas of focus range from artificial intelligence and autonomous guidance systems to data analysis, critical infrastructure protection, energy resilience, and cybersecurity. Additionally, the fund closely monitors innovations in Space situational awareness and digital decision-support systems aimed at mobilization, energy resilience, and protecting critical infrastructure. Its ultimate goal is to enhance Europe's security and strategic autonomy.

This fund is also among Europe's first significant initiatives designed to bring private capital closer to the defence sector, historically an industry burdened by cultural stigma. Until recently, private investors had limited opportunities to enter the defence market beyond publicly traded shares, and defence-related investments were often viewed negatively from a cultural standpoint. However, public perceptions are shifting, with increasing recognition of defence as a necessary deterrent and a protector of democracy and security. In this sense, the fund benefits from its Northern European heritage, where societal attitudes are significantly evolving, and institutional investors such as pension funds are gradually warming to defence investments.

Keen Venture Partners' fund has already demonstrated its unique approach through several notable investments, including funding for radar software originally developed for automotive applications and drone software for civil protection purposes. With its clear European perspective, the fund aims to strengthen Europe's strategic autonomy by transcending national interests and helping the continent position itself as a global player on par with the United States. The innovation lies in applying venture capital methods to the defence industry, placing equal emphasis on selecting promising projects and executing them rapidly. This approach rewards quick iterations in product development and cost efficiency, crucial factors in fostering successful, agile businesses. Such an approach could decisively bridge the gap between traditional defence innovation and emerging technological advancements.

Therefore, as the new European Defence White Paper highlights the importance of mobilizing private capital, funds like these are especially valuable, as they can effectively support SMEs (Small and Medium-sized Enterprises) and contribute to strengthening and expanding the defence industry’s supply chain across Europe.

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