It’s not often I go to a conference where the hosts warn the audience there might be some attendees “who don’t want to tell you who they are”. I’m also not used to some moderators walking onstage in full military dress, or to exceedingly vigilant bouncers telling off guests who break the “no photos” rule.
But then again, I haven’t been to many (any) defence conferences before — although, given the huge boom in defence tech funding, I’m sure this won’t be the last.
Setting the (sombre) scene at the Resilience Conference in London yesterday morning, the Nato Innovation Fund (NIF’s) new and outgoing chairs, Fiona Murray and Klaus Hommels, respectively, described how Russian drone attacks are mounting — in Ukraine, and elsewhere — and told us that many think we’re three or four years away from war.
European defence tech funding, meanwhile, is experiencing ‘hockeystick’ growth; up from $114m in 2016 to, Dealroom projects, $2.3bn by the end of this year.
But a lot of that funding and attention has gone into too many, too similar companies (as my colleague Anne Sraders wrote last week), a sentiment that came across loud and clear from many speakers.
"[VCs] want to go into defence with the same degree of intellectual laziness that they once avoided the sector with," said Helsing co-CEO Torsten Reil.
Since 2019, $603.7m has been invested in UAVs (unmanned aerial vehicles), across 96 rounds, according to a report published by Dealroom and Resilience Media yesterday. Compare that to $30.2m for anti-drone technologies.
Perhaps the most powerful panel I saw was with two Ukrainian soldiers, expertly moderated by Eveline Buchatskiy, managing partner at Ukrainian VC D3. They spoke about how they have R&D ‘departments’ within their battalions, and regularly work with startup founders to try out products on ‘test fields’, in safe locations, to give those companies real-time feedback on their technology.
Yet despite all that innovation, there simply aren’t enough weapons or drones, they said. “The enemy is evolving day-by-day, making it cheaper day-by-day.”
“Please, make more weapons,” they asked the audience.
Other takeaways those onstage wanted us to have:
One: Innovation has to be fast and endlessly adapting. “Working strategically is working urgently,” said one of those Ukrainian soldiers. “Every two or three months a product that was useful [previously] stops being so.”
Tiberius Aerospace’s Andy Bynes and Stark’s Philip Lockwood agreed that we need more engineers embedded in battalions, iterating technology on the battlefield.
“Everyone is talking the right game […] but we’re not moving at the pace we need,” said Rich Drake, general manager of Anduril UK & Europe. “We’re losing time.”
Two: Europe’s supply chain has to prepare for war. Most European countries will want to build their own critical infrastructure manufacturing capabilities; but how far along are they? Could some existing manufacturing hubs (ie. in automotive, or aerospace) be repurposed (or prepare to be repurposed) for war?
Three: A broader range of defence tech companies need to get funding. There’s huge demand for more anti-drone systems, for example, said the Ukrainian soldiers; they’re currently only able to intercept about 10% of drones in the battlefield.
Four: The security services want to work with startups. Across various organisations and acronyms in the UK — GCHQ, MI6, NSSIF (the National Security Strategic Investment Fund), HMGCC (His Majesty's Government Communications Centre), CSOC (Cyber & Specialist Operations Command) — there's a move to do more work in the open, and make it clearer what technologies they need and what kinds of organisations they want to work with to obtain them.
And then an open question: Should more investors be backing Ukrainian startups? Bessemer Ventures' Alex Ferrara said that, while his fund backs defence companies, it wouldn’t invest in a Ukrainian startup “for obvious reasons”. Although Ferrara didn’t elaborate, others onstage said ‘complicated’ cap tables, high risk and a lack of export capabilities all put off many European and US investors from backing Ukrainian startups, despite their formidable innovation capabilities.
Readers, I’m intrigued: Are there really not ways around these challenges? Who's actively spinning out technology from Ukraine? Do you entirely disagree? Get in touch.
