“We decided with the government to create a defence industry fund in the extent of 50 million euros which will strengthen Estonia’s security and help boost the economy,” said Prime Minister Kaja Kallas. “Estonia has a very highly developed technology sector, but there is a market failure in the use of this capacity to increase our national security. The state can help with seed funding here. The support of the fund will provide the Estonian defence industry companies an opportunity to develop and bring innovative products to the market. In addition to strengthening the Estonian security, the creation of the fund also means creating jobs with a high added value, as well as an even faster development of the Estonian technology sector, which is already remarkable now.”
Tiit Riisalo, Minister of Economic Affairs and Information Technology, also highlighted the positive impact of the defence industry fund on the development of the Estonian technology sector and on the economic growth. “The fund will support the target of the economic plan which was published in March to double the volume of the Estonian economy by 2035. New investments are important for the development of the defence industry, as they support the companies of the field in developing innovative technologies and marketing new solutions. In order to launch the funding operationally, we created the SmartCap national investment fund creating a new defence industry fund in addition to the already functioning Risk Capital Fund and Green Fund to manage investments. Those funds allow to involve private capital in the development of defence industry start-ups and deep-tech,” said Riisalo.
“Establishing the defence industry fund is certainly a great and positive step for the development of the local defence industry and for strengthening the Estonian defence capacity,” remarked Minister of Defence Hanno Pevkur. “The development of the Estonian defence industry can be accelerated by the military aid provided by Estonia to Ukraine. Estonian companies already cooperate with Ukraine and our military aid to them enables to create additional opportunities for the Estonian defence industry companies. It is important to us for our products to reach Ukraine where they can be put to use today, while we can gather valuable experience on the battlefield,” he said.
The defence industry fund will start making direct investments into the equity of the companies developing defence technologies or technologies with dual use. The fund will mainly be investing in companies which are operating in Estonia and will be making investments in the extent required to alleviate excessive risks for the companies to be attractive for private capital. The detailed terms and conditions of the fund will be developed by the Ministry of Economic Affairs and Communications and the government plans to discuss them in July.
