Government launches €100 million defense industry fund

The government has established a €100 million fund to support investments in the defense industry. Startups will benefit the most from the new scheme.
The purpose of the fund is to develop Estonia's defense industry and support will be allocated from the state budget, Tuesday's "Aktuaalne kaamera" reported.
"The first €50 million has already been paid in, and the government has approved the decision for the second €50 million, which will be disbursed within this half of the year. We assessed that €100 million is a sufficient amount to launch the fund. Now that the fund is operational, we will begin active engagement with companies. In addition to businesses, we will also invest in private funds," said Minister of Economic Affairs and Industry Erkki Keldo (Reform).
The aim is to attract private investors, and over the long term, the fund is expected to become profitable. Up to €10 million will be invested per company. Investments will be managed by state-owned fund management company Smartcap.
"The defense fund can also invest outside Estonia in companies located in NATO member states, provided we have a clear understanding of how this benefits Estonia's defense industry," said Smartcap CEO Sille Pettai.
The industry faces difficulties in raising funds from the market due to restrictions.
"If we look at different funding opportunities, whether from investors or banks, there are certain limitations. One of the constraints is that funding cannot be used for lethal technology. The mechanism offered by Smartcap allows companies to develop lethal technologies as well," said Kalev Koidumäe, head of the Defense and Aerospace Industry Association.
KrattWorks, which manufactures drones for both Ukraine and the Estonian Defense Forces, has already applied for financing.
"We have held initial discussions with Smartcap and included the necessary actions in our activity plan for the next six months to move this forward. Our need for investments this year is around €5-6 million. How much we will raise from Smartcap is still to be determined," said KrattWorks CEO Tõnis Voitka.
He said it is particularly beneficial in the defense industry to show potential investors that the company has state backing.
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Editor: Aleksander Krjukov, Helen Wright
Source: Aktuaalne kaamera