EU and NATO’s programmes announced, on Tuesday (2 July), they will partner to support funding in the defence sector, to attract more private investors, to deal with industry’s demands to get more access to funds for innovation and production.
The European Investment Fund (EIF) – part of the European Investment Bank (EIB) – and NATO Venture Capital Innovation Fund (NIF) signed a deal “to encourage more private-capital funds to become active investors in technology sectors associated with defence and security, enabling EU companies to raise equity funding from a broader range of sources,” said the EIB in a statement.
Improving access to finance has been a key demand from EU-based defence industries for years, whether for research, development or increasing production output. They have argued they have been discriminated against when accessing private and public funds, as banks are unwilling to lend, thus hindering their investment opportunities.
EU leaders and ministers are looking for ways to increase money into industry, hoping it will increase production, answer Ukraine’s wartime needs, and upscale the bloc’s military-industrial complex.
The EIB has recently updated its lending policy.
Former vice-president of the EIB in charge of defence Kris Peeters, told Euractiv in January that a deal was in the making for this year, between the EIF which invests in small and medium enterprises (SMEs), start-ups and mi-capitalisation companies (mid-caps), and the NATO venture capital fund backed by 24 members and worth €1 billion.
The cooperation aims to “share knowledge and raise awareness about the potential of investments in defence and security,” said the statement.
More concretely, the two organisations will exchange knowledge in the investment criteria with the aim to increase funding for small and medium companies (SMEs) and mid-caps.
Banks, financial institutions and private investors do not all share the same criteria to decide whether to invest into certain activities, including those that are defence-related.
This lack of common understanding has led to uncertainty and differences in treatment, argues the industry.
The cooperation between the EIF and NIF aims to create new ways to channel money to the defence industry, understands Euractiv.
“Strengthening our partnership with the NATO Innovation Fund affirms the EIB Group’s commitment to step up its support for Europe’s security and defence industry,” Robert De Groot, vice-president of the EIB, told Euractiv.
Managing Partner of the NATO Innovation Fund, Andrea Traversone, said in a statement that “there is great momentum in deep tech that is propelling innovations to help strengthen European defence, security and resilience.”
[Edited by Alexandra Brzozowski/Rajnish Singh]
