SmartCap Defence Fund invests €10 million in Darkstar, the first dedicated pan-European venture capital fund focused on military and dual-use technologies tested on the battlefield in Ukraine. This represents an anchor investment for Darkstar and the first investment for SmartCap Defence Fund.
Darkstar bridges frontline combat experience from Ukraine with European defence innovation, connecting battlefield-tested startups with the funding, real-world validation, and strategic partnerships they need to scale. The fund is designed to equip Estonia and Europe with the next generation of modern weapon systems and industry know-how, grounded in real combat performance.
“Darkstar is one of the first institutional quality VC funds in Europe that will significantly contribute to the development of defence technology companies in Estonia, Ukraine, and across Europe, while also building the highly specific defence investment expertise and ecosystem in Estonia.”
Sille Pettai, CEO of SmartCap
According to Minister of Economy and Industry of the Republic of Estonia, Erkki Keldo, developing Estonia’s defence industry is essential for ensuring national security and enhancing the economy’s competitiveness.
“We have launched the largest industrial growth plan in the country’s history. 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,” said Keldo.
Darkstar boosts defence innovation in Europe
“SmartCap’s mission is to diversify and increase the supply of equity investments for Estonian companies with export potential. We are extremely pleased to make the first SmartCap Defence Fund investment into an Estonian defence-sector VC fund,” said SmartCap’s CEO Sille Pettai.
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“Darkstar is one of the first institutional quality VC funds in Europe that will significantly contribute to the development of defence technology companies in Estonia, Ukraine, and across Europe, while also building the highly specific defence investment expertise and ecosystem in Estonia,” added Pettai.
The €25 million fund contributes up to €1 million in pre-seed investments per company. At launch, it has already closed two deals and aims to complete four to five more within its first year.
“Darkstar’s team has a unique network, outstanding collaboration projects in Ukraine, and no restrictions to invest in single-use military solutions. This enables us to address the critical capability gaps and the growing demand for modern defence technologies in Estonia and Europe – including the weapon systems,” Pettai explained.
From battlefield to manufacturing
“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 Ragnar Sass, co-founder of Darkstar.
“We’re building the fastest path from battlefield to manufacturing. Europe needs defence technologies that are tested, trusted, and field-ready.”
Ragnar Sass, co-founder of Darkstar
Darkstar is focused on investing in companies whose products meet the demands of today’s warfare. ”We’re building the fastest path from battlefield to manufacturing. Europe needs defence technologies that are tested, trusted, and field-ready,” added Sass. “This fund is not about future visions – it’s about what works under fire.”
The €100 million SmartCap Defence Fund aims to increase and diversify capital supply to the defence sector by investing in venture capital and private equity funds focused on military and dual-use products and technologies, as well as through direct investments in defence companies. SmartCap’s Defence Fund makes direct investments in seed, early-stage and growth-stage defence companies.
GOOD TO KNOW
An anchor investment for Darkstar
- The activities of the Defence Fund will increase the availability of defence capital, which has traditionally been difficult for defence companies to secure from the private sector.
- SmartCap’s €10 million investment in the Estonian venture capital fund Darkstar will serve as an anchor investment, with additional private contributions bringing the fund’s total volume to €25 million.
- Darkstar is a pan-European fund specializing in innovative defence technologies. It targets companies developing dual-use and military technologies, supporting their relocation to Estonia for production and further expansion across Europe. “For example, Farsight—Darkstar’s first portfolio company—has relocated its headquarters to Estonia and hired its first employees here,” the minister Erkki Keldo explained.
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