As part of the funding round, Isar Aerospace secured funding of up to EUR 270 million. In particular, the funding is intended to support the expansion of production capacities and the further scaling of launch vehicle production. The aim is to set up highly automated series production with a capacity of up to 40 Spectrum launch vehicles per year. In addition, the funding strengthens the development of independent European launch capacities for government and commercial satellite missions.

The capital increase was driven by strong interest from international investors. Previous funding rounds have already been supported by the NATO Innovation Fund, Eldridge Industries and Porsche SE, among others.

Island Green Capital (IGC) is a discrete, inflection focused venture capital firm that invests broadly across focus sectors for the US and Allied Nations. These include Aerospace & Defense, AI, Specialty Manufacturing & Robotics, Financial Services, and Software. With a flexible investment approach, IGC evaluates companies from Series A through pre-IPO.  Aside from being true partners at the board and company level, IGC helps with the less visible but often critical work such as structuring non-dilutive debt, employee liquidity programs, and resolving cap table complexity. With its commitment to Isar Aerospace, its first in Germany, IGC underlines its interest in European technology leaders and the increasing importance of the space industry as a key sector for economic and geopolitical sovereignty.

ADVANT Beiten advised Island Green Capital on all legal aspects of the transaction, including the negotiation and review of the relevant transaction documentation as well as the structuring and implementation of the investment. The retention was based on the recommendation of the US law firm Massumi + Consoli, with which ADVANT Beiten advised on the transaction in close coordination. The successful cooperation underlines the law firm's international network as well as its special expertise in complex cross-border venture capital and growth funding. At the same time, the retention confirms ADVANT Beiten's strong position in advising international investors on investments in German and European technology companies, especially in innovation-driven industries of the future such as SpaceTech, DeepTech and DefenceTech.

Advisors to Island Green Capital:

ADVANT Beiten: Dr Dominik Moser, Tassilo Klesen (both Venture Capital/Private Equity, Berlin), Dr Marion Frotscher (Taxes, Hamburg).

Public Relations

Frauke Reuther
Manager Kommunikation
ADVANT Beiten
+49 (69) 75 60 95 - 570
frauke.reuther@advant-beiten.com

Innovations in the field of defence and security are no longer optional but an imperative requirement to preserve one's own sovereignty. Not least because of this, the start-up community in the field of security technology is experiencing an upswing, driven by international investment and a growing awareness of the importance of autonomous defence capabilities, with a view to becoming independent of the United States. 

Current developments and market trends

The trend continues: In 2025, USD 8.7 billion was invested in European defence start-ups, according to a report by the NATO Innovation Fund and Dealroom. In 2024, it was still around USD 5.2 billion. This corresponds to an increase of 55% compared to the previous year. Germany and the United Kingdom remain European leaders in terms of total funding. Munich in particular has established itself as a European centre for defence tech, with USD 1.7 billion in investments in 2025 alone. 

The dominant technology in the sector is artificial intelligence in a wide variety of forms and applications, be it autonomous systems or data analysis. 

Growing political and institutional support

In 2025, the political and institutional flanking of the European defence start-up community has become significantly more concrete and operationalized than in 2024. While 2024 was still characterized by programmatic announcements and political policy papers, 2025 will focus on concrete funding instruments, procurement mechanisms and industrial policy programmes.

Central to this is the further development of European defence initiatives such as the European Defence Fund (EDF) and the implementation of new instruments to strengthen the European defence industry, especially with a focus on SMEs and start-ups. Programmes such as the European Defence Industry Programme (EDIP) explicitly aim to scale innovative providers, integrate them into European value chains and promote cross-border cooperation. This is shifting the regulatory framework from selective project funding to structural industrial development.

For start-ups, this results in new opportunities but also more complex regulatory requirements. Subsidies are regularly linked to consortium structures, export control requirements, security inspections and IP regulations. In addition, there are stricter requirements in the area of investment control (FDI screening), especially for investments from third countries. The increasing sensitivity to security policy means that transactions in the defence sector are being examined more intensively than in 2024.

From a legal perspective, this makes early structured advice all the more important. Many areas of law – such as corporate law, state aid law, public procurement law, export control and investment screening – are intertwined. Projects in the defence sector therefore regularly require a cross-jurisdictional and cross-border approach. Those who strategically anticipate regulatory requirements can ensure eligibility for funding, reduce transaction risks and accelerate scaling. 2025 clearly shows that the regulatory framework is no longer a mere side effect but a key competitive factor in the defence tech ecosystem.

Dr Mario Weichel
Kevin Einert, LL.M.

From Property Rights to Instruments of Power

Intellectual property rights – particularly patents – are traditionally understood as tools for protecting technical innovations. However, their role extends beyond exploitation through licensing or litigation. Rather, IP rights can be leveraged strategically to block competitors from market access, strengthen one's own strategic position, or even control critical infrastructures.

IP rights can thus become a strategic instrument through the consistent use of the existing legal framework, for example, by withdrawing licenses from certain players or by selectively sharing know-how. The accumulation of extensive IP rights portfolios in security-relevant technologies – such as satellite communication, drone technology, sensor systems, cryptography or artificial intelligence – can also serve as a strategic deterrent.

Those holding exclusive rights in key markets can not only block third parties from entering the market, but also activate regulatory leverage – for instance in the context of export controls, security reviews or investment screening procedures.

In this context, IP rights can be used strategically in a number of ways:

• Strategic Acquisition and Monopolization: Companies may seek to acquire or assert control over critical IP rights in key areas as a means of excluding competitors, shaping supply chains or restricting access to essential technologies.
• Enforcement of Sanctions and Export Controls: IP licenses or the transfer of IP-protected technologies can be leveraged to pursue strategic goals or undermine the capabilities of competitors or adversarial players. This applies in particular to dual-use technologies that can be used for both civilian and military purposes.
• Active IP Protection and Enforcement: Safeguarding relevant technologies from unauthorized acquisition or reverse engineering requires a robust and proactive approach. This includes not only preventive measures and internal security protocols but also the consistent extrajudicial and judicial enforcement of IP rights so as to prevent the outflow of expertise and ensure long-term competitiveness.
• Defense against Unwanted Technology Transfer ("IP leakage"):
  IP assets and sensitive technologies must be protected from strategically motivated access attempts by potentially adversarial partners or entities.

Leveraging the Legal Framework

For companies in the defense and aerospace sector, but also for companies that develop dual-use technologies, it is essential to develop a proactive IP strategy that addresses the aforementioned risks and at the same time optimally protects and uses their own IP assets. The existing legal framework offers numerous ways to achieve this objective:

1. Robust IP Protection: One essential measure is the implementation of a comprehensive IP strategy, including the protection of trade secrets and technical know-how. This also entails the consistent implementation of strict internal processes to protect confidential information.
2. Due Diligence for M&A Transactions and Cooperations: In M&A transactions or R&D partnerships, a thorough IP due diligence process is essential – not only to uncover potential infringement risks but also to assess dependencies on critical technologies or third-party rights.
3. Strategic Licensing and Technology Transfer Agreements: By drafting contracts appropriately and implementing technology transfer controls, companies can manage access to their IP rights while ensuring compliance with export control laws. This can include the inclusion of "clawback" clauses that allow for the withdrawal of licenses in the event of certain geopolitical developments.
4. Active enforcement of IP rights: In the event of IP infringements, swift and consistent legal enforcement is crucial. This can include legal proceedings, arbitration or recourse to customs authorities to prevent the sale and import of infringing products.
5. Geopolitical Risk Management in Contract Drafting: Contracts with international partners should explicitly include clauses that address the impact of sanctions, export restrictions or other geopolitical events on IP usage rights.

Conclusion

The strategic deployment of IP rights described above illustrate the great importance of IP rights in a geopolitical context. For companies operating in the defense, aerospace dual-use sectors, a sound understanding of these relationships and the resulting dynamics is essential. IP rights are no longer just a competitive factor but an integral part of risk mitigation and national security.

The need for innovative technologies for defence, cyber security and reconnaissance is increasing. At the same time, start-ups that provide new impetus for Europe's security architecture with artificial intelligence, robotics and drone technologies are playing an increasingly important role However, one thing remains crucial for this trend to be sustainable: Without sufficient funding from venture capitalists on the one hand and the awarding of public contracts to start-ups on the other, many of these ideas will remain stuck in the early development phase.

Current developments and market trends

For a long time, defence start-ups in Europe were considered a niche phenomenon. But this is changing rapidly. According to a report by the NATO Innovation Fund and Dealroom, around USD 5.2 billion was invested in European defence start-ups in 2024 - an increase of 24 per cent compared to the previous year. Germany has surpassed the United Kingdom as the largest target market for investment in this sector. Munich in particular has established itself as the European centre for defence tech, with almost USD 1 billion in investments in 2024 alone.

Paradigm shift 2025: safety precautions are the new ESG

Since the Munich Security Conference 2025 at the latest, it has been clear that Europe must increasingly stand on its own two feet in terms of security policy. With Donald Trump's return to the White House and the clear strategic reorientation of the USA away from European security guarantees, the era of the American defence umbrella is in fact history. The consequence: Europe must secure its own defence capabilities - technologically, militarily and financially.

This geopolitical upheaval has also changed investment logic.

Just a few years ago, investments in military technologies were often rejected across the board with reference to ESG criteria. The idea that "defence" per se was incompatible with ethical and sustainable investing shaped the investment criteria of many VC funds. Today, this view is considered outdated, as a new understanding now prevails: There is no sustainability without security.

The defence of democratic societies, the protection of critical infrastructure and resilience to hybrid threats have become the central pillars of a new ESG approach - one that does not exclude geopolitical reality but rather integrates it.

This can be seen not least in practice: More and more family offices, sovereign wealth funds and topic-specific VC funds are opening up to investments in security-related start-ups. The NATO Innovation Fund (with a volume of EUR 1 billion), the Estonian DeepTech Defence financing model and new funds such as Helantic are examples of this development.

Helantic - a new defence fund based in Switzerland - plans to invest EUR 100 million specifically in defence and dual-use start-ups. The focus is not only on end products such as drones or robotic systems but also on components such as batteries, sensors or software architectures. What is crucial, according to the founders, is that a specific civil-commercial market is developed and that the founding team has commercial excellence and a sense of responsibility in terms of security policy.

A look at current fund structures in Europe shows a growing diversity of approaches that complement each other: Although Helantic is based in Switzerland, the investment focus is clearly on Germany and Europe. Around half of the planned fund volume of EUR 100 million is to be channelled into German start-ups. The high density of qualified engineers, the excellent research infrastructure and the large number of successful spin-offs from German universities are decisive for this focus. The allocation of funds reflects this strategic focus: 50 per cent of the fund volume is earmarked for Germany, 30 per cent for Central and Eastern Europe and 20 per cent for promising global markets.

Estonia is also increasingly positioning itself as a driving force for defence-related innovations: With a newly created state defence fund totalling EUR 100 million, the Baltic country is investing specifically in military and dual-use technologies. Managed by the investment company SmartCap, the fund supports both start-ups and specialised venture capital funds. The aim is to strengthen the domestic industry, create new jobs and expand Europe's technological sovereignty.

In Germany - especially in Munich, which became a hotspot for defence tech investments in 2024 - almost USD 1 billion has gone into defence-related start-ups. The trend is clear: Investing in security today means investing in stability - and in the future of Europe. 

Successful examples from practice

Taking a look at the start-up landscape reveals that success stories do exist. The Munich-based company Helsing develops AI solutions for analysing sensor data for military systems and closed a financing round of EUR 450 million in 2024. For instance, the German robotics start-up ARX Robotics, which develops modular unmanned vehicles, recently received funding from the NATO Innovation Fund.

Outlook and recommendations

To realise its full potential, the start-up scene needs:

• More specialised venture capitalists with a deep understanding of dual-use technologies,
• More efficient regulatory processes and better interfaces between companies, investors and ministries, in particular the possibility of awarding major contracts to young start-ups instead of only to established companies, and
• A broader social understanding that defence and innovation are not mutually exclusive.

Only if it succeeds in combining key elements - specialised capital, regulatory clarity and social understanding - will Europe be able to compete for security-relevant technologies in the long term. Venture capital plays a crucial role here. However, it is just as important for politicians to take a positive and pragmatic attitude towards the numerous defence start-ups. They should become an integral part of a new procurement strategy for European armies so that the latter can benefit from the fast innovation cycles of start-ups.

The initial positive trends in this field described above must now be transformed by all stakeholders into a sustainable development stage. To achieve this, it is essential to substantially increase the acceptance of both defence tech and venture capital across society as a whole. Only with the help of start-ups will we be able to at least partially close the innovation gap between Europe and the USA and Asia and at the same time improve the European security situation.

Danielle Golinski, LL.M.
Dr. Mario Weichel

This is a blank check for the future government to borrow a theoretically unlimited amount for defence and security. This is also a significant increase compared to the (currently not yet exhausted) "special fund" from 2022, which was limited to 100 billion euros. It remains to be seen how high the new federal government will actually set defence spending, but considerable increases are to be expected.

The specific services to be procured have not yet been determined. It is planned to draw up a priority list for urgently needed armaments in the near future, from which initial details will emerge. 

How will it be possible for foreign companies to participate with their services in this massively increasing defence budget? The usual answer to this question would be: by participating in procurement procedures that are published in advance in the Official Journal of the EU. However, this answer does not apply without restriction in the defence sector anyway, as special procedural rules apply in some cases. These special rules have already been significantly extended for the "special fund" from 2022; the potential coalition partners from CDU/CSU and SPD are also planning to present a new law to speed up and simplify procurement within the first six months of forming a government.

In view of the still unclear situation as to which services are to be procured in which order and the expected simplification of procurement processes, it will therefore be crucial for foreign companies in particular to position themselves proactively with their products. With our experience in the defence and security sector, we can provide you with the following practical tips:

1. Understand the structures in the defence procurement sector
   
   The procurement of defence equipment in Germany is organized on a decentralized basis. In addition to the political level, the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw), which handles the actual procurements, plays a decisive role. However, the role of the Bundeswehr Planning Office, which is usually involved in the run-up to procurement measures, in the upcoming decisions on the services to be procured has not yet been clarified and should be carefully observed.
   
    
2. Position your services at an early stage
   
   Particularly in view of the lack of clarity about which services should be procured and in what order, there are currently clear opportunities to position your own products. However, swift, proactive action is required here - once the priorities have been established, it will be very difficult to bring a product that does not fall under these priorities into the discussion.
   
    
3. Make your company known
   
   In general, it is essential that your company, your expertise and your product portfolio are known in the right places. This is the only way to have a chance of being involved in specific procurement measures. Relying on open competition is a risky strategy in view of the expected simplification of procedures.
   
    
4. Look for partners
   
   Establish contacts with established (especially national) companies in the defence industry in order to benefit from their experience and networks and go to market together.
   
    
5. Get professional support
   
   Whether in the run-up to or within a procurement measure - the public client in the defence sector is a "special" customer. Different stakeholders must be taken into account, who regularly have heterogeneous interests. If you are not familiar with the particularities of the German defence sector, you could easily end up with nothing - regardless of the quality of your products.
    

If you need support with your market access in the German defence sector, we can assist you. We have been advising public clients for more than 20 years, especially in the defence sector. As a result, we have first-hand knowledge of the existing structures and the key players in defence procurement. We are happy to share our expertise with you - from the initial contact to support in a specific procurement process.

Michael Brückner

The new reality - defence technology as a growth market

The global political situation has escalated dramatically in recent years. With the ongoing war in Ukraine, increasing tensions in various regions of the world and general uncertainty, we are experiencing a historic turning point. The much-cited "turning point" has long since become a reality - and with it, considerable sums are flowing into defence.

This opens up completely new perspectives: Companies that previously only manufactured civilian products are now seriously considering whether and how they can make their technologies and expertise usable for the defence sector. For medium-sized companies with technological expertise in particular, the question arises: What funding opportunities are there for entering the defence technology sector?

Here is an up-to-date overview of the most important programmes and instruments that will be available at the beginning of 2025:

European Funding Opportunities

European Defence Fund (EDF) - the flagship of EU funding

The European Defence Fund (EDF) will provide around 1.065 billion euros for defence research and development in 2025. Particularly interesting for newcomers: 4% of the budget is reserved for "disruptive" technologies and a further 6% for innovative projects focussing on SMEs.

The current 2025 work programme comprises 33 topics in nine tenders - from ground combat and cyber defence to environmentally friendly technologies. The focus is on projects such as cyber defence, marine and underwater capabilities and sensor systems.

Funding conditions in brief:

• Applications must generally be submitted by consortia of at least three independent organisations from three EU Member States
• Two partners from two countries are sufficient for disruptive technology projects
• Only companies/organisations based in the EU or Norway are eligible for funding
• Depending on the project type, the funding rate is up to 100% (especially for pure research)
• There are bonus points for the participation of SMEs

Important for your planning: The tenders have been running since mid-February 2025 and the deadline for submitting project applications is 16 October 2025.

Defence Equity Facility – capital for innovative startups

Another exciting opportunity is the Defence Equity Facility (DEF) which was launched at the beginning of 2024. This venture capital fund has a volume of 175 million euros and seeks to mobilise private venture capital for defence technology innovations with dual-use potential.

The DEF does not invest directly in companies, but in specialised private funds which in turn invest in security and defence companies. It is planned to initiate investments of up to 500 million euros in defence-related startups and SMEs by 2027.

The DEF could facilitate access to urgently needed growth capital, especially for innovative startups that develop new technologies such as AI, sensor technology or cyber security.

German Funding Opportunities

Dual-use potential in civil innovation programmes

An approach that is often neglected or ignored is to apply the classic innovation funding programmes such as ZIM (Central Innovation Programme for SMEs) or KMU-innovativ. Although these programmes are primarily civilian in nature, they can also be relevant for defence technology under certain circumstances.

The Federal Ministry for Economic Affairs and Energy is generally open to all technologies when it comes to ZIM. Defence technology companies can also receive ZIM grants, provided the project content can be used for civilian purposes - such as new material technologies, electronics or AI applications that could later be used for military purposes.

The same applies to BMBF programmes such as KMU-innovativ which offer calls for tenders in fields such as AI, electronics or security technologies. Although direct defence topics are excluded, security and defence as an area of application can benefit indirectly.

Cyber Innovation Hub of the Bundeswehr (German armed forces)

The Cyber Innovation Hub of the Bundeswehr (CIHBw) serves as an interface between the start-up scene and the Bundeswehr. It was launched as a pilot project to bring military users together with civilian innovations.

The CIHBw strengthened its partnerships in 2025. Particularly noteworthy is the strategic partnership concluded with the University of the Federal Armed Forces Munich on 11 February 2025. This alliance aims to closely link research and innovation with the requirements of the troops.

The hub also offers support for intrapreneurship and regularly organises innovation challenges - an exciting opportunity for innovative companies to develop their solutions directly with the Bundeswehr.

Strategic Orientation - What Is Being Promoted?

Anyone wishing to enter the defence sector should be guided by the National Security and Defence Industrial Strategy adopted in December 2024. This strategy defines clear key technologies that are prioritised for future funding:

• IT and communication technologies for military purposes
• Artificial intelligence (AI) and autonomous systems
• Naval shipbuilding
• Government shipbuilding
• Protected/armoured vehicles
• Sensors (reconnaissance, radar, optoelectronics)
• Protection technologies and electromagnetic combat

Other critical areas include quantum technologies, missiles and air defence, space technologies, munitions and unmanned systems (unmanned aerial vehicles).

Projects that fall into these categories have a much better chance of receiving funding and being awarded long-term contracts.

Practical Tips for Beginners

As experienced lawyers with a view to funding practice, we would like to give you some practical tips:

1. Use existing expertise: Cooperate with established companies in the defence industry to benefit from their experience.
2. Think dual-use: Develop technologies that can be used for both civil and military purposes. This strategy maximises your funding opportunities.
3. Form consortia: Cooperation with partners from other EU countries is essential for the European Defence Fund. Establish networks at an early stage.
4. Pay attention to safety aspects: The defence industry is subject to special security requirements. Make sure that your company fulfils the necessary requirements.
5. Plan early: The application deadlines are often long and the procedures complex. Start preparing at least six months before the deadline.

Conclusion - A Market in Transition

The current global political situation has caused fundamental changes in the defence sector. The massive investment in European security is creating completely new business opportunities - even for companies that were previously active in other areas.

The funding programmes presented offer various entry options. The combination of European funds (EVF) for research and development with national programmes for concrete implementation is particularly promising.

Those who act strategically now and adapt their civil expertise to the defence sector can benefit from this growth market in the long term.

Do you have questions about funding for defence technologies or need support with your application? Contact us - we will be pleased to help you!

Dennis Hillemann
Johannes Voß-Lünemann