AVP and Earlybird have launched E2D, a €500 million growth-stage fund dedicated to European defence and dual-use technologies. The initiative addresses a persistent gap in the region's startup ecosystem, where founders have long struggled to secure backing for defence-related ventures.
The €500M fund will target growth-stage companies operating at the intersection of defence and deeptech. It represents one of Europe's largest dedicated pools of capital for this sector, signalling a shift in investor appetite toward a historically stigmatized vertical.
Currently, 85% of NATO defence tech funding flows to the United States, according to TechFunding News. E2D aims to rebalance this distribution by providing European startups with the scale-up capital needed to compete with their American counterparts. The fund's focus on dual-use applications—technologies with both military and civilian utility—broadens its addressable market and reduces reliance on single-customer defence contracts.
The launch comes amid rising geopolitical tensions and increased NATO spending commitments, creating a favourable environment for defence innovation. It also coincides with growing acceptance of defence startups as legitimate investment targets, following breakthroughs in areas like autonomous systems, secure communications, and advanced materials. E2D is positioned to capture this momentum, though execution risks remain high given the regulatory complexity and long sales cycles inherent to the defence industry.
Earlybird and AVP, both established European venture firms, bring combined experience in deeptech and enterprise investing. Their partnership on E2D signals a conviction that European defence startups can achieve commercial success without relocating to the US, a pattern that has historically weakened the continent's defence tech base.