This American VC is betting on European defense tech; that’s still very unusual

VCs are known to determination successful herds, which is wherefore Eric Slesinger stands retired a bit. While astir American investors pursuit AI startups oregon U.S.-based defence tech startups, the erstwhile CIA serviceman is hunting for defence tech deals successful Europe. In fact, Slesinger, laminitis of 201 Ventures, precocious closed a $22 cardinal money focused connected seed-stage European defence tech startups. His way from processing gadgets and bundle for CIA agents to becoming possibly the lone American VC exclusively investing successful European defence tech besides appears to beryllium a prescient one.

What would compel idiosyncratic to permission “the champion archetypal occupation ever” astatine the CIA to prosecute this circumstantial ambition? As Slesinger told TechCrunch successful a caller StrictlyVC Download podcast interview, the reply came from identifying a captious displacement that galore missed. “I near due to the fact that I noticed that the backstage assemblage was progressively playing a relation successful this contention that I antecedently had understood truly to conscionable beryllium a authorities to authorities competition,” Slesinger explained. “What became evident much truthful each time was that the backstage assemblage was playing specified a large relation here.”

With degrees from Stanford successful mechanical engineering and Harvard Business School, Slesinger’s inheritance helped hole him to span the spread betwixt defence exertion and commercialized ventures. But it was his willingness to spell against accepted contented that has made him absorbing to investors, founders, and tech reporters alike.

“I person ever enjoyed going wherever different radical thin to not privation to go,” said Slesinger. “That was wherefore I enjoyed the enactment astatine the CIA truthful much. A mates of things that radical determination utilized to accidental was, ‘go wherever others don’t spell and bash what they can’t do.’”

As for what U.S. VCs were missing, from Slesinger’s constituent of presumption determination were 3 things. First, “Europe has idiosyncratic entrepreneurs that are conscionable arsenic hungry, conscionable arsenic precocious conviction, and conscionable arsenic astute arsenic anyplace other successful the world.” Second, “European governments waited mode excessively agelong to rethink what the statement connected their ain information meant, and truthful hadn’t really taken a captious oculus towards it.” And third, “Europe was rapidly being seen and will, successful my opinion, proceed to beryllium the tract of superior grey portion competition,” meaning activities by authorities oregon non-state actors that autumn betwixt accepted bid and outright war.

Perhaps the astir astonishing facet of Slesinger’s European task has been the taste absorption helium says helium encountered regarding defence investments. In 2022, aft moving from the U.S. to Madrid, helium started the European Defense Investor Network, which present includes entrepreneurs, investors, and policymakers. In a 2023 Medium post, Slesinger wrote astir however his European VC colleagues were acrophobic to speech astir their defence related investments. Unlike successful America, helium told TechCrunch, defence tech investing successful Europe “was seen arsenic uncouth, thing that should beryllium done but not spoken about, and surely not spoken astir successful polite institution astatine the meal table.” (Slesinger rapidly added, “I’m exaggerating a small bit, but there’s a kernel of information there.”)

He says that taste hesitance resulted successful “many founders reasoning astir it, deciding not to physique a institution successful the [defense] space.” Now that’s changing. The NATO Innovation Fund — the world’s archetypal multi-sovereign task superior fund, backed by 24 NATO allies and launched successful the summertime of 2022 aft the Russia-Ukraine warfare broke retired — has helped. Indeed, it’s a important backer of 201 Ventures.

So has the attraction garnered by up-and-coming defence tech startups connected the continent, including Munich-based Helsing, which is processing AI for usage connected battlefields and is presently valued astatine much than $5 cardinal by its investors. Another up-and-comer successful Slesinger’s portfolio is Delian Alliance Industries, an Athens-based outfit processing surveillance towers to observe autonomous threats. Delian has truthful acold raised seed backing but is simply a blistery summons that’s surely being actively courted by VCs.

With 8 investments to date, 201 Ventures focuses connected technologies that code that grey portion contention because, successful Slesinger’s words, it’s “happening astatine standard successful Europe, and it volition for the adjacent mates of decades.” These marketplace dislocations, helium said, “whether they’re terms inefficiencies oregon a authorities playing a larger relation successful a marketplace that it mightiness otherwise, if not for wanting a sovereign capability… these grey portion dislocations really are a bully signifier of alpha.”

In summation to Delian, different of Slesinger’s bets is Polar Mist, a Swedish startup producing maritime drones with precocious navigation capabilities. Other absorption areas see hypersonics and subsurface mapping.

One situation successful backing defence tech startups is the longer improvement timeline compared to accepted task investments. Slesinger acknowledged this hostility successful his chat with TechCrunch: “If you person a 10-year-venture-fund beingness cycle, that’s a existent happening that we benignant of person to bash things to effort to accelerate oregon crook a small bit.”

Slesinger besides thinks that “European companies ought to beryllium doing much lobbying astatine overmuch earlier stages.”

Both rise questions astir whether his gamble volition wage disconnected for investors. At the aforesaid time, his aboriginal imaginativeness for a much autonomous European defence ecosystem is becoming clearer to a full batch of different investors these days arsenic geopolitical tensions emergence and Europe rethinks its information arrangements.

Data published earlier this twelvemonth by the NATO Innovation Fund and the probe radical Dealroom showed that European startups moving connected defence and related tech raised 24% much superior successful 2024 than successful 2023, hitting $5.2 billion — surpassing adjacent AI funding. With President Donald Trump returning to bureau successful January and casting uncertainty connected the U.S.’s committedness to European defense, that fig is apt to ascent adjacent higher.