Tech startups to receive historical NATO investment for defense and security

The North Atlantic Treaty Organization (NATO) has officially secured $1.1 billion to invest in defense and security tech startups.

The fund represents the first instance of a private-sector defense and security investment backed by multiple nations. While the U.S. did not contribute to the initiative, 23 NATO-allied governments donated toward the final amount over the course of a year. One of these countries, Sweden, has yet to officially join the alliance, although it is in the process of entering the treaty. The money will go towards contractors and tech startups developing “dual-use emerging technologies.” This broadly defined category can include artificial intelligence systems, autonomous vehicles, biotechnology, quantum-based computing and propulsion systems for aerospace travel.

Upon announcing the investment in 2022, NATO Secretary General Jens Stoltenberg commented, “With a 15-year timeframe, the NATO Innovation Fund will help bring to life those nascent technologies that have the power to transform our security in the decades to come, stregthening the Alliance’s innovation ecosystem and bolstering the security of our one billion citizens.” The remarks arrived just months after the Russian invasion of Ukraine, which may have created new demand for defense and security tech startups.

Private-public partnerships, especially in the area of technology, can rapidly speed up product development and innovation. However, defense and security tech startups often struggle to access capital. Crunchbase notes that investments into the sector amounted to less than $1.9 billion in 2022, $1.4 billion of which was given to autonomous system developer Anduril Industries, a company created by Oculus founder Palmer Luckey. But the new NATO investment signals a potential shift in investment priority. Funds backed by multiple governments may be more fiscally attractive to countries that lack the massive defense budget owned by the U.S. Time will tell if the NATO Innovation Fund will create more investment opportunities for startups.