Estonia is making yet another big bet on the future of European defence. Tallinn-based Darkstar, which bills itself as Europe’s first dedicated defence-focused venture capital fund, has just secured €10M from Estonia’s SmartCap Defence Fund.
The fund departs from traditional venture capital’s focus on fintech startups and SaaS platforms. Instead, Darkstar is hunting for what partner Ragnar Sass calls “what works under fire.” The €25M fund, anchored by Estonia’s investment, focuses exclusively on military and dual-use technologies that have proven their worth in actual combat conditions. It focuses on a practical approach and invites companies to participate in its bootcamps: five-day innovation accelerators, hosted in Ukraine in partnership with elite military units.
Darkstar seeks out companies whose products are already being used by Ukrainian forces. Being one of Ukraine’s most generous and steady partners, Estonia seeks to learn more and build up its own capabilities.
“Estonia has emerged as Europe’s fastest-growing and most founder-friendly defence ecosystem. This growth is driven by an entrepreneur-friendly economic environment, the benefits of e-residency, and strong governmental support for defence innovation. For example, the readiness of the Estonian Defence Forces to develop innovation capabilities is exceptional, even on an international scale,” said Sass.
Darkstar team. From left to right: Kaspar Gering, Ragnar Sass, Valeriia Sviripa, Mart Noorma. Photo: Darkstar
According to Economy Minister Erkki Keldo, developing Estonia’s defence industry is essential for both national security and economic competitiveness. “We have launched the largest industrial growth plan in the country’s history,” he explains. “Its goal is to strengthen our security while simultaneously boosting economic growth. The €100 million Defence Fund is a key part of our defence industry’s comprehensive value proposition, which aims to multiply the sector’s export volume and revenue by 2030.”
Darkstar has closed two deals at launch and aims to complete four to five more within its first year, contributing up to €1 million in pre-seed investments per company. One early success story is Farsight, Darkstar’s first portfolio company, which has relocated its headquarters to Estonia and started hiring locally, writes Trade in Estonia.
