Venture capital firms AVP and Earlybird have announced the launch of E2D, a new €500 million fund dedicated to European dual-use and defence technology. This significant Franco-German collaboration aims to bolster the continent's technological sovereignty by investing in growth-stage companies. The initiative is designed to close critical capability gaps and retain vital capital, talent, and intellectual property within Europe.
A Strategic Franco-German Alliance
The partnership was formed to address the fragmented nature of Europe's defence investment landscape, which is dominated by smaller, domestic funds. AVP identified Germany as a pivotal market due to its recent commitment to significantly increase defence spending after decades of under-investment. This alliance combines AVP's software and AI expertise with Earlybird's long-standing track record in European deep tech, creating a powerful synergy.
Addressing a Critical Market Need
E2D launches amid a historic surge in European security spending, with nations like France and Germany committing substantial new budgets. Historically, promising European defence and dual-use companies have been compelled to seek funding from United States investors to scale their operations. The new fund is strategically positioned to reverse this trend, providing a robust European alternative for financing growth.
Investment Strategy and Focus
The fund will operate at the growth stage, targeting approximately 20 companies with an average investment size of around €25 million. E2D intends to lead investment rounds in Series B and later stages, providing substantial capital to promising ventures. This strategy is designed to support companies as they scale and mature within the European ecosystem.
E2D's investment scope will encompass all critical domains, including space, air, land, maritime, and subsurface technologies. The fund will back businesses with modern operating models and a clear mission focus, whether they are defence-native or have dual-use applications. This broad mandate allows the fund to support a diverse range of innovations crucial for European security.
Leadership and Financial Backing
The fund is led by a team that includes AVP General Partner Benoit Fosseprez and Earlybird Co-Founder Roland Manger. They are joined by a third partner with over a decade of experience in defence technology investment. A world-class strategic committee composed of military and industrial leaders from across Europe will provide guidance and insight.
E2D is scheduled for its first close at the end of June, having already secured commitments from large financial institutions and corporate limited partners. The fund's backers include a mix of French and German industrial and financial players, reflecting its cross-border foundation. A final close is anticipated in the first quarter of 2027, with plans to include public sector actors.
The establishment of the E2D fund marks a pivotal moment for Europe's defence technology sector, directly addressing the need for sovereign investment capabilities. By combining French and German venture capital expertise, the fund is well-positioned to cultivate a new generation of technology champions. This initiative ultimately aims to foster a more resilient, innovative, and self-sufficient European defence industrial base for the future.