Lithuania has committed €40 million to expand its defence technology investment capabilities through MILInvest 2, a specialized fund targeting innovative security and defence companies. The Ministry of Economy and Innovation, working alongside the Ministry of National Defence, announced the substantial allocation to strengthen the nation’s defence sector innovation.
The investment vehicle represents Lithuania’s strategic approach to fostering domestic defence capabilities whilst supporting emerging technology companies. MILInvest 2 builds upon the foundation established through a financial agreement between ILTE and Lithuania’s defence and economy ministries, creating a structured pathway for defence-focused venture capital.
Investment Strategy and Management Structure
ILTE UAB will oversee the fund’s operations, with plans to engage two financial intermediaries for direct management responsibilities. These intermediaries will handle pre-acceleration programmes, accelerator initiatives, and direct equity investments in qualifying companies. The selection process for these key partners remains ongoing, with announcements expected during the fourth quarter of 2025.
The fund’s investment thesis centres on supporting micro, small, and medium-sized enterprises developing defence technology concepts. This approach emphasises building technical teams and strengthening sector-specific competencies rather than pursuing large-scale acquisitions or established players.
Previous Programme Performance
The original MILInvest programme, launched in 2023 with a €13.5 million budget, has already demonstrated tangible results across diverse technology sectors. Portfolio companies include Pulsetto, developing vagus nerve stimulation technology, and Active Photonics, which focuses on laser technology applications.
Additional investments encompass Granta Autonomy‘s FPV drone development, Blackswan Space’s space technology initiatives, and BROSWARM‘s demining solutions. This portfolio diversity illustrates the fund’s broad interpretation of defence and security applications, extending beyond traditional military hardware into adjacent technologies with dual-use potential.
Strategic Implications for Lithuanian Defence Sector
The enhanced funding allocation signals Lithuania’s commitment to building indigenous defence capabilities through private sector innovation. The programme’s structure suggests a recognition that modern defence challenges require agile, technology-driven solutions that traditional procurement processes may struggle to deliver efficiently.
By focusing on smaller enterprises, MILInvest 2 addresses a common gap in defence technology funding, where companies often face challenges securing capital for early-stage development. The fund’s pre-acceleration and accelerator components indicate a comprehensive approach extending beyond mere financial support to include business development and technical guidance.
Market Context and Timing
The programme expansion occurs against a backdrop of increased European focus on defence technology independence and capability development. Lithuania’s geographic position and security considerations make indigenous defence technology development particularly relevant for national security planning.
The nearly three-fold increase in funding from the initial €13.5 million to €40 million suggests positive assessment of the first programme’s performance and potential for expanded impact. This scaling approach allows for both deeper investment in existing portfolio companies and broader market coverage across emerging defence technologies.
The anticipated timeline for financial intermediary selection, extending into late 2025, provides sufficient preparation time for comprehensive due diligence and strategic planning. This measured approach contrasts with rushed deployment strategies that might compromise investment quality or strategic alignment.