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• Launched last year at the Alliance Summit in Madrid, the NATO Innovation Fund will operate like a traditional venture capital fund and will make direct investments in startups located in the 23 participating Allied countries, as well as as indirect investments in deep technology funds with a transatlantic impact.
• The Innovation Fund, worth €1 billion, will also explore investment options in Ukraine, as the country developed a number of emerging deep-tech startups during the war.
• Participating countries such as Bulgaria can use the funds to modernize their military processes and much more.
Ukrainian deep tech startup Mantis Analytics is developing an AI-based information field monitoring platform that can detect, defend and thwart information warfare.
Founded just after the full-scale invasion of Russia, the startup is among the local companies aiming to increase the effectiveness of information warfare using ML, NLP and Big Data technologies.
Over the past year and a half, the war in Ukraine also saw the deployment Startlink satellites, drones, artillery and missile systems, electronic warfare, AI, as well as data integration and Big Data analysis on the battlefield.
From now on, the further development of similar technologies will be the focus of the €1 billion NATO Innovation Fund (NIF).
The fund is made up of 23 of its member states: Belgium, Bulgaria, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania , Slovakia. , Spain, Turkey and the United Kingdom – with the imminent addition of Sweden as well, once the country officially completes its accession process.
According to the NIF, participating allies will invest capital through their sovereign wealth funds or government ministries.
As part of its capacity building objective, the NIF will also seek to finance attention to each country and region to ensure geographic diversity – and it will also consider investing in startups originating from Ukraine, a NIF spokesperson told The Recursive.
The emergence of deep tech startups after the war in Ukraine
For Maksym Tereshchenko, CEO of Mantis Analytics, the main advantage that a country like Ukraine can have in attracting NIF investments is that a large number of similar deep technology technologies and solutions are currently being tested on the fields of Ukrainian battle.
“Many technologies are tested in real combat conditions before moving to industrial development and transition to the business sector. Another advantage for Ukrainian companies is faster access to markets and partnerships of NATO countries. It used to be a difficult process, but now it is becoming faster, and the NATO Innovation Fund can be the next step,” Tereshchenko told The Recursive.
Since the start of the war in February 2022, Ukraine and the rest of the region have also experienced a increase number of deep-tech startups – which can be further amplified with the help of the NIF, Ukrainian entrepreneurs say.
“As Ukraine has a growing deep tech sector, particularly in defense, this could be a very effective vehicle for many startups in the region. Given the complexity of attracting private capital in a country at war, funds like NIF could have a much higher risk tolerance and be incentivized to interact with local startups,” the Ukrainian entrepreneur told The Recursive and CTO of deep tech startup Haiqu, Mykola Maksymenko.
While Ukraine is at the heart of information resistance, support for different deep technological solutions can also provide a basis for better long-term global security.
“We are actively engaged in testing and refining new technologies that could also prove beneficial in other regions. NATO’s collaboration with Ukrainian startups therefore has mutual benefits. It’s not about Ukraine or any other country in particular, but about global security,” Tereshchenko adds.
For investors like Pawel Bochniarz, one of the founders of Polish deep tech venture capital Radix Enterprisesalthough Ukraine has unfortunately become a testing ground for many new technologies, it has revealed the importance of having a technological advantage in war.
“There are promising developments in the field of 3D printing that enable very specific applications in the military domain (think 3D printing from advanced functional materials on the battlefield). I have also seen a lot of work related to new energy sources for military devices (UAVs, smart munitions) or even engineering solutions that improve the survivability of soldiers in armored vehicles,” said Bochniarz at The Recursive.
Modernize military and societal processes
As a participating member of the fund, Bulgaria can modernize not only its military processes, but also society as a whole, experts emphasize. The country is already part of the DIANA accelerator (Defense Innovation Accelerator for the North Atlantic) through its GATE Institute, which serves as a test center for NATO in the areas of Big Data and AI.
“The targeted projects will derive value for Euro-Atlantic security from so-called emerging and disruptive technologies (EDT). Currently, NATO recognizes the following EDTs: AI, Autonomy, Quantum, Biotechnology and Hypersonic Human Enhancement Systems, Space, New Materials and Manufacturing, Energy and Propulsion, and Next Generation Communication Networks”, Borislav Bankov, GATE’s NATO expert, tells The Recursive.
While these EDTs pose a challenge, they can also be an opportunity if they fall into the right hands, says Bankov.
According to the expert, DIANA and NIF are opportunities to accelerate the modernization of the Bulgarian Armed Forces by actively involving innovators from Bulgaria and NATO allies in the creation of new generation technologies.
“Nevertheless, DIANA and NIF represent an opportunity to modernize not only the Bulgarian military sector but also many societal processes in the country. Today, threats like disinformation extend beyond the military and affect society as a whole. Therefore, DIANA and NIF aim to develop and support dual-use technologies that can be used not only by military officers, but also for the benefit of economic security, energy resilience, health sector, development digital and many others,” adds Bankov.
Potential benefits for NATO’s Western Balkans wing
Last month, during a event Ahead of the NATO Summit in Vilnius, newly appointed NIF Director General Andrea Traversone encouraged small countries to quickly adopt emerging disruptive technologies, while highlighting their potential role as leaders in driving the NATO agenda. innovation and wider technological adoption within the Alliance.
According to Dublin-based intelligence analyst Michael Lambert, while it will take time to see the first results of these investments, smaller countries can also hope that their ecosystems will get a boost from incoming capital from the NIF.
“The results will not be visible for many years. Nevertheless, the NATO Innovation Fund could help some little-known startups, as in the case of members like Estonia, which lacks funds because its domestic market is smaller,” Lambert told The Recursive.
Furthermore, smaller members of the Western Balkans wing of the Alliance, such as North Macedonia, Croatia and Albania, could also potentially benefit from the opportunities offered by the NIF in the coming years.
However, for this to happen, a change in their approach to innovation is necessary first, says Skopje-based military expert Metodi Hadji-Janev, who served as Macedonian defense attaché in Washington DC.
According to him, the region has already seen this potential – which must be further developed.
“Some of the pioneering and complementary efforts of the NATO Innovation Fund, such as the NATO Innovation Challenge supported by the Norfolk-based Transformation Command, have already taken place in Macedonia, at the Military Academy from Skopje. The fact that media interest in this event, as well as the quality of national project ideas, was at a very low level, testifies to the need to change something profound in this issue,” the military expert concludes.
