Background

NATO and its non-member allies find themselves at an inflection point as state and non-state actors pose existential risks to global stability and security. China's rise, the emergence of a revanchist Russia, and continued turmoil in parts of the Middle East are some of the likely drivers of conflict between now and 2030.

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This has led to a growing public awareness of the importance of strengthening defense capabilities as well as to a significant increase in defense expenditure. As reflected by recent conflicts and threats, cutting-edge technology such as unmanned autonomous vehicles, cyber and electronic warfare, robotics, hypersonic vehicles as well as artificial intelligence (AI) and advanced data analytics play a decisive role in the prevention of security threats and the protection of vital national interest and infrastructure. 

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Having recognized that the public sector is no longer the primary driver of innovation in many fields of technology that are considered “dual use” (i.e. of interest to both the military and commercial customers) governments are increasingly embracing private equity and venture capital to maintain their technological superiority in critical areas of national security. This makes early-stage dual-use space, defense, and critical technologies an attractive investment opportunity that is defined by favorable risk characteristics and a highly asymmetric return profile.

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