- Since 2019, the US has captured around 85% of NATO defence-tech venture funding — Europe accounted for just 6.2% in 2025 despite defence budgets surging across the continent.
- 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 prioritising semiconductors, AI, New Space, drones, and directed energy, with a first investment expected by summer 2026.
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.
“Public data gives a useful sense of scale. Roughly half of late-stage financings have been backed by US or Asian capital. Since 2019, the US has captured around 85% of NATO defence-tech venture funding. European defence-tech funding has roughly doubled over the past year, but Europe still accounted for only about 6.2% of NATO-wide defence-tech VC funding raised in 2025,” say Benoit Fosseprez, general partner at AVP and Roland Manger, co-founder of Earlybird, to Tech Funding News.
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. The first investment is expected by summer 2026.
Why the money is finally moving
France 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 LPs refused to touch defence at all, leaving a serious gap between political ambition and available growth capital. European defence-tech funding has roughly doubled over the past year, but the baseline was so low that the continent still punches well below its weight.
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.
“We’re prioritising what French and German armed forces, as well as our advisory board of former leaders from armed forces, NATO, and the defence industry, have identified as key capability targets. That includes semiconductors, high-performance computing, AI, New Space, effectors — robots, drones — and directed energy,” add Manger and Fosseprez.
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.
The fund is led by Fosseprez and Manger, joined by two investors with over a decade of defence technology investment experience, giving the team credibility in a sector where relationships with procurement officials and prime contractors matter as much as capital. Both firms say their teams were active in defence and dual-use technology long before most European funds were permitted to invest in the sector at all.
“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 Fosseprez.
“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 Manger.
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.
With 85% of NATO defence-tech funding going to the US since 2019, the bar for what counts as “closing the gap” is high. Whether €500M moves that number meaningfully, or whether it takes ten more funds like this one, is the question the European defence tech ecosystem will be living with for the next decade.
