Estonian venture capital firm Darkstar is bucking the trend of venture capitalists refraining from funding defense tech and is investing in purely military applications to rearm Europe with solutions proven on the battlefield in Ukraine.
Estonian venture capital firm Darkstar is bucking the trend of venture capitalists refraining from funding defense tech and is investing in purely military applications to rearm Europe with solutions proven on the battlefield in Ukraine.
Darkstar helps startups pitch their products to military customers both in Ukraine and across Europe, TechCrunch writes. For Ukrainian teams, this means not only funding, but also support in creating legal entities in NATO countries, such as Estonia.
«In any company that wants to participate in European procurement or even grants, the operational side must be perfect», — notes the company’s co-founder and general partner Ragnar Sass.
Darkstar recently closed its first round of €15 million. Investors included European entrepreneurs, family offices and Estonian state fund SmartCap. The target is €25 million. The fund intends to focus on Pe-Seed and Seed rounds, with an average check size of €500,000 to €1 million.
«We have become the first fund in Europe that can legally invest even in weapons — in systems that are actually used on the front», — Ragnar Sass told DOU.
Darkstar has already made two investments: in the Ukrainian-Estonian startup FarSight Vision, which specializes in geospatial analytics and 3D mapping for drone pilots, and Deftak, which develops ammunition for drones.
«If you don’t have real know-how in this area, you’re going to struggle,» says Sass. For Darkstar, gaining that know-how meant talking to end users from day one.
In the case of Darkstar, the end users are Ukrainian brigades, where Ukrainian combat units are allowed to make some of their own decisions regarding armaments.
«Over the past three and a half years, I have visited Ukraine more than 20 times and personally met with more than 100 unit commanders — spent time with them, talked to them, learned from them. Elite units are more like startups than we can imagine,» says Ragnar Sass.
While cheap FPV drones have been used to destroy millions of dollars in equipment, the Darkstar co-founder says it would be a big mistake to think that technological developments from Ukraine are easy to copy. According to him, «most of the elite drone battalions in Ukraine have their own research and development departments.»
«Darkstar is actively looking for new companies in Ukraine. We analyzed 300 companies in Europe and see that the best Defense Tech companies are in Ukraine. The next Future Army Bootcamp will be held this summer in Ukraine, and we want to find companies whose product can help Ukraine win quickly», — said the co-founder of the fund.
Saas noted that he supports the humor of NAFO, a global online movement that uses memes to support Ukraine, but also expressed concern about Russia’s military economy. «The enemy is moving very quickly, and that’s why I think we need to engage the technology community much more to confront this huge and growing threat», — he says.
