As defense and dual-use technologies move to the center of the European venture capital stage, few firms are as well-positioned—and as early to the trend—as Vektor Partners. Valentin Menedetter, General Partner at the firm, shares how Vektor has been navigating and shaping this evolving landscape since 2020. What followed was a compelling deep dive into the intersections of geopolitical urgency, deep tech innovation, and the changing mindset of institutional investors.
From Deep Tech to Dual-Use: A Thesis Years Ahead
Long before the war in Ukraine and the renewed urgency around European defense, Vektor Partners launched its first fund focused on deep tech and dual-use technologies—those that serve both commercial and defense applications. While the timing may now seem prescient, Menedetter says it was simply a natural extension of the team’s conviction in complex, mission-critical technologies.
“We didn’t set out to launch a ‘defense tech fund.’ We focused on deep tech with horizontal applications—and many of those naturally overlapped with defense,” Menedetter explained.
“Today’s relevance only confirms what we already believed: these technologies matter—and they scale.”
Why LPs Are Suddenly Paying Attention
Over the past year, especially in recent months, LP interest in dual-use investing has surged. What was once seen as a niche or politically sensitive category is now recognized as a key strategic domain—not only for national resilience but also for economic opportunity.
Menedetter noted that limited partners are beginning to see dual-use investing not just as necessary, but as smart capital allocation.
“A couple of years ago, defense wasn’t on most investors’ radars. Today, LPs are realizing that these technologies are critical for energy resilience, food security, and infrastructure defense. The overlap with sustainability and long-term resilience is becoming obvious.”
He added that investors from the U.S. and APAC are particularly interested in accessing European innovation, drawn by the high quality of engineering talent and the relatively modest valuations compared to Silicon Valley.
Europe’s Competitive Edge: Talent, Urgency, and Focus
According to Menedetter, Europe holds a strong hand in this emerging market: highly skilled engineers, a strong academic research base, and growing regional urgency—especially in countries like Finland and Poland that have long understood the importance of security and deterrence.
“Many of the best founders in this space don’t come from the usual startup circles,” he said. “They’ve spent years in specialized industries or military research, and now they’re building companies with real impact. That’s why sector expertise is so important—you won’t find these startups just by walking around at a general tech conference.”
The Role of Private Capital: Not Just for Governments
One persistent myth is that defense and security innovation should be funded solely by governments. Menedetter strongly disagrees.
“We absolutely need more private capital in this space. Governments play a role, of course—but it’s private capital that can scale innovation quickly and flexibly.”
He sees a growing openness among family offices, institutional LPs, and even generalist funds to allocate capital here—as long as the managers have deep domain expertise and access to the right networks.
Avoiding the Hype Trap: Why Sector Knowledge Matters
With rising geopolitical tensions and media attention, there’s a real risk of hype distorting investment flows—something Menedetter is keen to avoid. He draws parallels to the recent impact investing boom, where capital rushed in without always being directed toward the most effective solutions.
“We need to ensure that capital is flowing to truly innovative and mission-relevant technologies—not just buzzwords,” he warned.
“This is not a sector where you can fake it. You need real experience to assess the commercial and operational potential of these companies.”
He also emphasized the need for professionalization in the space: more GPs with relevant backgrounds, and more LPs who understand the nuances of defense and dual-use sectors.
Key Investment Areas: Software, Compute, and Infrastructure Resilience
When asked which segments of dual-use tech are most critical, Menedetter highlighted several key themes:
Edge computing and computer vision: Especially for applications like autonomous systems and real-time battlefield intelligence.
Software-defined hardware: Enabling more flexible and efficient systems for both civilian and military use.
Energy resilience and decentralization: A major vulnerability in modern conflict, especially as demand for compute increases.
Telecommunications and infrastructure security: Including subsea cables, satellite comms, and fault-tolerant networks.
“Everything is interconnected,” Menedetter said. “From compute to power to comms—if you want to build real resilience, you need to think across the entire value chain.”
A Portfolio Case Study: Real-Time AI at the Edge
To illustrate the firm’s thesis in action, Menedetter described a portfolio company building edge-based computer vision systems. These devices allow real-time processing on the hardware itself, reducing cloud dependency and latency—critical for applications ranging from industrial automation to drone surveillance.
“It’s a perfect example of a dual-use solution—built for commercial supply chain monitoring, but just as effective in the defense sector for border security or battlefield awareness.”
The Road Ahead: Europe’s Opportunity to Lead
For Vektor Partners, the mission is clear: back the best deep tech founders solving critical problems—across commercial and defense markets—and support them with sector-specific insight, networks, and conviction capital.
As the geopolitical landscape continues to evolve, Menedetter believes Europe has a unique opportunity to lead—but only if it continues to invest smartly, build industrial capabilities, and retain its top talent.
“This moment isn’t just about defense—it’s about sovereignty, innovation, and building a future where Europe isn’t just catching up, but setting the pace.”
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