Twelve months after the first meeting between funders and industrialists in the defense industry, investment vehicles have multiplied at an unprecedented rate. However, startups still struggle in securing their rounds of growth financing.
A year ago to the day, on March 20, the ministries of the Economy and Defense brought together banks, insurers, investment funds, and defense industrialists in the same room to discuss financing. The dialogue, chaired by Hervé Guillou and Philippe Brassac, had a specific objective: to remove the obstacles preventing private capital from flowing into the Defense Industrial and Technological Base. France acknowledged at this level that its technological sovereignty would not be funded solely through public procurement.
A wave of unprecedented capital
Between September 2025 and February 2026, France witnessed the emergence of more defense-labeled investment vehicles than in the past thirty years. Tikehau Capital launched a Defense and Security fund targeting 500 million euros on June 16; Bpifrance structured a retail fund accessible to individuals from 500 euros for 450 million; Weinberg Capital Partners raised Eirénè to 275 million after a new closing in October; Latour Capital introduced Emergence Défense at 400 million; Sienna IM deployed Hêphaïstos, a private credit fund of 270 million dedicated to European defense companies. In November, Bpifrance issued its first European Defence Bond, a one billion euro bond oversubscribed 3.8 times.
Banking sector adaptation
In banking, major networks have revised their sectoral policies, abandoning the vague notion of “controversial weapons” in favor of “prohibited weapons”, legally defined. Working groups have identified a need for equity ranging between 4.1 and 5.8 billion euros by 2030 for industrial capacities, with an additional 3 billion for dual-use technological companies.
For Hubert Raymond, Director of Innovation at GICAT, the first effect was as symbolic as financial. “The dialogue had a very strong legitimizing effect. Investing in defense is no longer a taboo subject for a funder. This is evident in the exchanges with GICAT members and the growing interest from investors in the startups we support.”
Sovereignty equals non-substitutability
Move Capital has been investing in sovereign tech since 2022, with around 40% of the portfolio in dual-use companies. Co-founder Hervé Malausséna acknowledges the changing climate: “What changed in twelve months is the institutional legitimacy of the subject. Many of these funds have not yet reached tech companies in the growth phase.”
Where many investors see sovereignty as a regulatory constraint or an ESG commitment, Move Capital makes it the core of its financial thesis. “A technology that is irreplaceable, cannot be bought by a foreign actor without creating a strategic dependence, has a structural competitive advantage. The test we apply is simple: could this company be acquired by an American or Chinese actor without posing a problem for critical French infrastructure? If the answer is no, the potential buyer circle is constrained, the customer relationship is typically more loyal, and the competitive entry barrier is higher.”
Hubert Raymond sees this logic in line with the #SouvTech concept since 2023. “We advocate for a ‘by design’ approach to sovereignty. Startups that have integrated this imperative into their technological architecture from the outset widen their commercial prospects: they can serve a demanding civilian client in the public service domain and an operator of vital importance with the same technological base.”
Gap in the 5 to 50 million range
Bpifrance, Definvest, the Defense Innovation Fund, and VCs cover the initial stages well. But as soon as a startup needs to finance its industrialization, recruit technical profiles, move into production, and secure its first export contracts, the number of potential investors dwindles. Some initiatives like the launch of ALVEVM bring additional values to growing companies, but they are still too isolated in a demanding ecosystem. This has been the observation of Hubert Raymond at GENERATE for the past two years, and the situation remains unchanged.
Hervé Malausséna is straightforward: “In Europe, there are currently fewer than five specialized funds capable of writing a 50 million euro ticket or more for a defense tech company. The imbalance with American financing capacities remains very pronounced. If specialized capital does not strengthen quickly enough, the most strategic assets of the defense industry will have to find their investors elsewhere.”
The influx of capital does not automatically solve this problem. Many new funds display a defense exposure without necessarily investing in strictly sovereign companies. The windfall effect to attract new LPs on the current thematic exists, and no one in the sector claims otherwise.
Eurosatory, the first meeting of SouvTech
In June, the Eurosatory exhibition will open its doors in Villepinte. Investment funds will have a dedicated space in Hall 4, a first in the history of the event.
It is a signal in itself. Historically, Eurosatory was the meeting point for industrialists and their clients: armed forces, ministries, and contractors. Bringing funders into this event recognizes that capital is now a full-fledged component of the defense value chain.
As conflict redraws the industrial priorities of Europe, Eurosatory will show if the capital has followed the intentions.
