Estonia’s startup ecosystem just levelled up, as Defence Business Lab becomes a permanent project to build internationally oriented startup champions.
To secure the status of Europe’s frontier DefenceTech destination, Estonia is moving fast, and is now building a pipeline for defence startups to win major international funding. Estonia’s Ministry of Defence, in collaboration with the Ministry of Economic Affairs and Communications, has established a pre-accelerator programme called the Defence Business Lab, according to the official press release.
Designed to help local companies compete more effectively in major international defence funding competitions, the programme aims to prepare early-stage development teams for successful applications to NATO DIANA (Defence Innovation Accelerator for the North Atlantic) and the European Defence Fund (EDF), two significant sources of defence funding.
This is yet another boost to an already robust ecosystem. Estonian defence companies have already demonstrated impressive results on the international stage. In the 2024 EDF funding round, international consortia with Estonian participation secured over one-third of the total fund allocation — approximately €365M. Several startups have already made it big in the VC space, such as Frankenburg Technologies, which is expected to raise $50M at $400M valuation.
“Estonian defence industry companies have proven that we are internationally at the forefront of defence sector development,” said Defence Minister Hanno Pevkur. “The pre-accelerator helps teams reach defence sector requirements faster and more confidently.”
Programme structure and results for defence pipeline
The programme was piloted in 2024 with notable success. Out of 50 applicants, 10 companies were selected for an intensive training programme. The results speak for themselves:
- One company succeeded in entering NATO DIANA;
- Three won Defence Ministry development grants;
- One applied to the EDF programme;
- One secured its first investment.
According to Siim Sukles, Undersecretary for Defence Industry and Innovation, the pre-accelerator significantly increased the number of companies applying to NATO DIANA and helps overcome typical barriers in the defence sector, such as understanding various regulations.
The Defence Business Lab is poised to become a permanent programme for supporting the defence industry — joining similar initiatives in countries like Sweden and Latvia that help their companies compete internationally in the defence sector.
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