European VCs AVP and Earlybird have teamed up to launch what they dub “E2D”, a growth-stage defence and dual-use technology fund targeting the creation of a €500 million fund.
The Franco-German venture will invest across space, air, land, maritime and subsurface technologies, backing both defence-native companies and businesses selling into military and commercial markets.
In a statement, E2D said it expects to hold its first close on June 30, with large financial institutions and corporates among its limited partners. The firms did not, however, disclose how much capital has so far been committed.
The fund plans to make around 20 growth-stage investments, writing average cheques of roughly €25 million. A dedicated team drawn from AVP and Earlybird will manage the strategy.
Its launch comes as European governments sharply increase defence spending, but many of the continent’s fast-growing defence startups still depend on American capital to scale.
France has committed €76bn to defence, Germany €152bn, and the EU has outlined an €800bn European defence plan, but European defence and dual-use high-growth companies tend to have to look to US investors to scale.
E2D argues that this risks moving strategically important technology, intellectual property and talent outside Europe.
The fund is intended to provide European companies with later-stage capital while helping them secure customers among armed forces, major defence contractors and strategic industries.
“European defence is at a historic turning point,” said AVP general partner Benoit Fosseprez in a statement, arguing that the continent needs investors able to combine sector expertise with pan-European reach.
AVP says it will bring growth-stage and transatlantic investment experience, while Earlybird is one of Europe’s longest-established deep-tech investors. The fund will also be supported by a strategic committee of military, NATO and defence-industry figures.
E2D enters an increasingly crowded European defence investment market as venture firms race to capitalise on higher military budgets and the removal of longstanding restrictions that had prevented some institutional investors from backing weapons and defence technologies.
