Finland joins NATO Innovation Fund

Source: Ministry of Economic Affairs and Employment of Finland

Finland’s accession to NATO opens up new opportunities for Finnish early-stage startups. Finland’s application to NATO's Innovation Fund has been approved, and Tesi will make a EUR 35 million investment in the fund. This also provides a new gateway to cooperation and financing opportunities for Finnish startups developing nascent technologies and for venture capital and private equity funds investing in them.

NATO’s Innovation Fund will invest in Participating NATO Member Countries’ early-stage deep tech startups and other venture capital funds developing nascent technologies of priority to NATO. The size of the Fund being established is one billion euros. Altogether, 22 NATO Member Countries committed to the Fund at the 2022 NATO Summit in Madrid. The NATO Innovation Fund will operationally launch this year on the margins of the NATO Summit in Vilnius.

Minister of Economic Affairs Mika Lintilä emphasises that it is important for Finland to become an active member in NATO’s central operations and networks right from the start.

“The idea of the fund is that the knowhow for and possession of new technology and top-notch innovations remain in the hands of NATO countries. Finland has huge potential in technologies central to NATO, such as in AI and quantum technology. The fund will grant Finnish early-stage startups developing disruptive technologies a new source of growth financing,” comments Mika Lintilä.

“We develop international networks and we channel international capital and expertise into Finland. Tesi’s investment will make NATO’s Innovation Fund and its cooperation networks available to Finnish venture capital funds and startups,” says Tesi’s CEO Pia Santavirta.


NATO Innovation Fund’s investments in venture capital funds and startups

The NATO Innovation Fund’s investments will target technologies that have mainly civilian and commercial applications but that can also be used for defence and security purposes (i.e. dual-use). These include: artificial intelligence; quantum-enabled technologies; novel materials; energy; biotechnology, next generation communications and space.

“In practice, NATO’s Innovation Fund focuses on financing companies in the deep tech sector. There are some 240 such companies in Finland, according to a survey conducted by Tesi. Deep tech companies typically need sizeable investments right from the outset, and their long development horizons require patient capital,” adds Matias Kaila, Tesi’s Director, Fund Investments.

While finalising elements of the Fund’s formation, NATO’s Innovation Fund will closely cooperate with NATO’s Science and Technology Organization (STO) and will complement NATO’s Defence Innovation Accelerator for the North Atlantic (DIANA). The NATO Innovation Fund will operationally launch this year on the margins of the NATO Summit in Vilnius and will aim to begin making investments soon thereafter.



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