Politics / Germany
Policy and political decisions with potential market and society impact. Topic: Germany. Updated briefs and structured summaries from curated sources.
NATO Innovation Fund chair, Fiona Murray: 'The threat from Russia is extremely real' | Podcast
Full timeline
0.0–300.0
NATO's launch of a 1 billion Euro innovation fund aims to enhance defense capabilities, backed by 24 countries, addressing security challenges.
- NATO announced plans to launch a 1 billion Euro innovation fund in 2022
- The fund is backed by 24 countries and aims to invest in defence and security
- NIFs portfolio includes deep tech and defence companies like OX Robotics and ISAIR Aerospace
- Four out of five original founding partners of NIF have left since its start in 2023
- Dame Fiona Murray is the current chair of the NATO Innovation Fund
- The mission of NIF is to build NATOs technological edge and invest in advanced technology
- Limited partners represent their nations, with about half from ministries of defence
- The contributions to NIF count towards the countries 3% defence spending targets
300.0–600.0
The recognition of the need for cutting-edge technology in defense has led to increased investments in startups, with nations like Estonia and Germany actively engaging in this shift.
- All of our 24 nations appreciate that in defence, security and resilience, we absolutely need cutting edge technology
- The technologies of the past wont solve the problems because our adversaries are working incredibly hard at the technological frontier
- The recognition that perhaps was part of why National Innovation Fund was created was that it was going to be in the hands of startups
- Estonia has been an extremely good customer, particularly in areas like cyber security
- Germany is starting to put contracts on the table and engage with startups
- The United Kingdom has been reorganising defence innovation as part of its new national armaments
- Our formal deployment schedule is to deploy about 100 million a year
- % of that goes to direct investments in startups and 20% goes into investments in funds
- Weve done 14 direct investments and invested in nine funds in total
- Weve crowded and co-invested about 1.4 billion euro
600.0–900.0
Startups in Europe's defense ecosystem are expected to scale into large companies through partnerships with established industrial firms, enhancing innovation and production capabilities.
- Limited partners include sovereign wealth funds, pension funds, insurance funds, and high net worth individuals
- There is a need for partnerships between startups and large industrial companies in Europes defense ecosystem
- Startups are expected to scale and grow into integrated large companies, referred to as neo primes
- NIF aims to couple innovation with industrial scale industrialization
- TechEver is building a factory in the UK, and a Portuguese drone manufacturing company is vertically integrating into industrial production
- Kraken, an autonomous boat company, is working with Luzon and Rheinmetall on production
- NIF has a Mission Platform Group to support companies in taking capabilities to ministries of defense
- NIF focuses on capability, security, and responsibility in building support systems for companies
900.0–1200.0
NATO's new partnerships and mission focus lead to high churn among startups, reflecting instability in early-stage ventures.
- NATO is experimenting with new partnerships and mission focus
- There is a high level of churn among startups in early stages
- LPs trust the board to make effective decisions despite challenges
- Klaus Hommels had a high salary of almost 700,000 euros per year
- NIF has adjusted salaries to align with venture capital standards
- NIF partners receive carried interest structured for long-term engagement
- Klaus Hommels stepped down to pursue his own defense investing
- NIF was established after Russias invasion of Ukraine in 2022
1200.0–1500.0
The ongoing grey zone conflict with Russia necessitates resilient infrastructure investments, which are crucial for economic growth and security.
- The threat posed by Russia is considered extremely real
- The Secretary General stated that we are Russias next target and already in harms way
- There is ongoing grey zone conflict with Russia, including incursions across borders and drone flights
- Resilient infrastructure is necessary to protect against threats to underwater cables and space-based communications
- Investments in technologies for infrastructure resilience are essential
- Governments need to encourage startups and large companies to invest in new solutions for security and resilience
- Current defense spending is focused on classic defense, with a smaller portion allocated to security and resilience
- Long-term investment in security and resilience is crucial for economic growth
- Regulation and market signals from the government will help spread responsibility for resilience and security
1500.0–1800.0
Increased recognition of cyber threats leads companies to prioritize resilience, impacting boardroom discussions and stock market valuations.
- Companies are beginning to recognize the increase in cost of cyber threats
- Boardrooms are taking resilience discussions seriously due to geopolitical shifts
- Government may require companies to report on resilience topics
- Europe has significant weaknesses in its supply chain, particularly dependency on China
- Underwater cables in Europe have vulnerabilities that need addressing
- AI data centers must be protected from physical and cyber threats
- Startups are emerging to address issues in supply chain provenance and infrastructure security
1800.0–2100.0
Funding challenges hinder hardware companies' scaling efforts, necessitating larger investments and innovative financing solutions.
- Companies need both an innovation mindset and an industrialisation mindset to scale
- Funding challenges exist, particularly for hardware companies
- The capital stack is functioning well for early stages but needs improvement for later stages
- Larger checks, such as $100 million or $200 million, are needed for hardware financing
- Banks find it difficult to bank defense companies due to high costs of capital
- KYC and anti-money laundering regulations complicate banking for defense companies
- Pension funds are hesitant to invest in defense security and resilience due to stigma
- There is a shift towards recognizing the importance of investing in defense sectors
2100.0–2400.0
NATO's increasing complexity in security needs drives a demand for innovative technologies, leading to a focus on long-term investments in resilience and supply chains.
- We are coming out of a sort of an obvious peace time into a time that is much more conflictual
- NATO is doing a tremendous amount of work in understanding market signals and needs
- NATO shopping list is getting longer as life gets more complicated
- There is a huge suite of technologies needed to counter unmanned aerial systems (UAS)
- NATO cares deeply about maritime autonomy and security in the maritime domain
- Investment in long-term resilience and supply chains is currently underfunded
- Knif has a time horizon of 15 years for investments, allowing for longer-term growth
2400.0–2700.0
Recognition of resilience value is increasing, leading to expected consolidation in the defense sector and partnerships among companies with complementary technologies.
- Deep tech takes longer and is typically underinvested in
- Recognition of the value of resilience is increasing
- Consolidation in the defense sector is expected
- Partnerships will occur when companies have complementary technologies
- Manufacturing location is a challenge for neo-primes
- Countries want domestic manufacturing for jobs and resilience
- Industrialization and building at scale are challenges for neo-primes
- Large companies may become more bureaucratic as they grow
- Collaboration with startups is essential for neo-primes
2700.0–3000.0
Defense technologies enhance civilian efficiency and safety, leading to broader societal benefits.
- Most defense technologies have a dual purpose
- Drones and robotics can improve civilian factory efficiency
- Autonomous software for the battlefield can enhance road safety
- Resilient pipelines and underwater cables can mitigate climate change impacts
- Technology developed for the Arctic Region will be important for navigation
- Defense advancements have historically led to civilian benefits
- Defense Advanced Research Projects Agency has supported the development of dual-use technologies