This American VC is betting on European protection tech; that is nonetheless very uncommon

[ad_1] VCs are identified to maneuver in herds, which is why Eric Slesinger stands out a bit. Whereas most American traders chase AI startups or U.S.-based protection tech startups, the previous CIA officer is trying to find protection tech offers in Europe. In reality, Slesinger, founding father of 201 Ventures, not too long ago closed a $22 million fund centered on seed-stage European protection tech startups. His path from growing devices and software program for CIA brokers to turning into maybe the one American VC completely investing in European protection tech additionally seems to be a prescient one.

What would compel somebody to go away “the very best first job ever” on the CIA to pursue this particular ambition? As Slesinger instructed TechCrunch in a current StrictlyVC Obtain podcast interview, the reply got here from figuring out a important shift that many missed. “I left as a result of I seen that the non-public sector was more and more enjoying a task on this competitors that I beforehand had understood actually to simply be a authorities to authorities competitors,” Slesinger defined. “What turned apparent extra so each day was that the non-public sector was enjoying such an enormous function right here.”

With levels from Stanford in mechanical engineering and Harvard Enterprise College, Slesinger’s background helped put together him to bridge the hole between protection know-how and business ventures. However it was his willingness to go towards typical knowledge that has made him fascinating to traders, founders, and tech reporters alike.

“I've all the time loved going the place different folks are likely to not need to go,” stated Slesinger. “That was why I loved the work on the CIA a lot. A few issues that folks there used to say was, ‘go the place others don’t go and do what they'll’t do.’”

As for what U.S. VCs had been lacking, from Slesinger’s standpoint there have been three issues. First, “Europe has particular person entrepreneurs which are simply as hungry, simply as excessive conviction, and simply as sensible as wherever else on the earth.” Second, “European governments waited method too lengthy to rethink what the association on their very own safety meant, and subsequently hadn’t really taken a important eye in direction of it.” And third, “Europe was rapidly being seen and can, for my part, proceed to be the location of great grey zone competitors,” which means actions by state or non-state actors that fall between conventional peace and outright conflict.

Maybe probably the most shocking facet of Slesinger’s European enterprise has been the cultural resistance he says he encountered concerning protection investments. In 2022, after transferring from the U.S. to Madrid, he began the European Protection Investor Community, which now contains entrepreneurs, traders, and policymakers. In a 2023 Medium submit, Slesinger wrote about how his European VC colleagues had been afraid to speak about their protection associated investments. Not like in America, he instructed TechCrunch, protection tech investing in Europe “was seen as uncouth, one thing that must be executed however not spoken about, and positively not spoken about in well mannered firm on the dinner desk.” (Slesinger rapidly added, “I’m exaggerating a bit of bit, however there’s a kernel of fact there.”)

He says that cultural hesitance resulted in “many founders serious about it, deciding to not construct an organization within the [defense] house.” Now that’s altering. The NATO Innovation Fund — the world’s first multi-sovereign enterprise capital fund, backed by 24 NATO allies and launched in the summertime of 2022 after the Russia-Ukraine conflict broke out — has helped. Certainly, it’s a big backer of 201 Ventures.

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So has the eye garnered by up-and-coming protection tech startups on the continent, together with Munich-based Helsing, which is growing AI to be used on battlefields and is at the moment valued at greater than $5 billion by its traders. One other up-and-comer in Slesinger’s portfolio is Delian Alliance Industries, an Athens-based outfit growing surveillance towers to detect autonomous threats. Delian has to date raised seed funding however is a scorching ticket that’s certainly being actively courted by VCs.

With eight investments up to now, 201 Ventures focuses on applied sciences that handle that grey zone competitors as a result of, in Slesinger’s phrases, it’s “occurring at scale in Europe, and it'll for the following couple of a long time.” These market dislocations, he stated, “whether or not they’re worth inefficiencies or a authorities enjoying a bigger function in a market that it would in any other case, if not for wanting a sovereign functionality… these grey zone dislocations really are an excellent type of alpha.”

Along with Delian, one other of Slesinger’s bets is Polar Mist, a Swedish startup producing maritime drones with superior navigation capabilities. Different focus areas embrace hypersonics and subsurface mapping.

One problem in funding protection tech startups is the longer growth timeline in comparison with conventional enterprise investments. Slesinger acknowledged this stress in his chat with TechCrunch: “You probably have a 10-year-venture-fund life cycle, that’s an actual factor that we type of should do issues to attempt to speed up or bend a bit of bit.”

Slesinger additionally thinks that “European firms should be doing extra lobbying at a lot earlier phases.”

Each elevate questions on whether or not his gamble will repay for traders. On the similar time, his early imaginative and prescient for a extra autonomous European protection ecosystem is turning into clearer to an entire lot of different traders lately as geopolitical tensions rise and Europe rethinks its safety preparations.

Information printed earlier this 12 months by the NATO Innovation Fund and the analysis group Dealroom confirmed that European startups engaged on protection and associated tech raised 24% extra capital in 2024 than in 2023, hitting $5.2 billion — surpassing even AI funding. With President Donald Trump returning to workplace in January and casting doubt on the U.S.’s dedication to European protection, that determine is prone to climb even greater.