British defence prime BAE Systems, which produces a range of military equipment from combat vehicles to naval guns, is investing €50m in European defence VC funds.
It will invest €25m each into Swiss VC Lakestar and Polish investor Expeditions, which are both actively investing in defence startups, including Isar Aerospace and Cambridge Aerospace, respectively.
The commitment brings Expeditions’ new fund, which is aiming to close in June, to more than €200m in commitments, cofounder Mikołaj Firlej tells Sifted. Lakestar has reportedly been raising a $300m defence fund since early last year.
BAE Systems told Sifted it could invest in more VC firms in the future.
The move to become an LP in defence funds is something BAE Systems has been “actively looking at” since February this year, Julian Cracknell, the chief technology and information officer at BAE Systems, told Sifted at the time; the company launched an incubator focused on spinning out internal research and IP into new startups and is investing “millions” into the programme.
“These latest investments show that we’re serious about supporting them as they look to play their part in delivering the technologies of tomorrow,” Dave Ewing, BAE’s head of technology commercialisation, said in a statement. “This latest step means we’re full steam ahead on making that a reality.”
Firlej tells Sifted Expeditions was in discussions with BAE for about half a year. “Their strategy fits very well with our focus as we were looking for a strategic partner who could work with us closely to support defence tech companies and accelerate the integration of such companies into larger programmes,” he says.
“Based on our experience, BAE systems is one of the more innovative prime contractors who can move faster than many other incumbents, so we are pleased to partner with them.”
BAE’s move comes as some of Europe’s staid defence primes are increasingly looking to invest in, work with or acquire defence startups. Italy’s Leonardo has been more actively looking into startups, with Simone Ungaro, co-general manager of strategy and innovation, telling Sifted in November that the company is “like hungry wolves” for more acquisitions.
