SmartCap Defence Fund

Overview

SmartCap Defence Fund is a venture capital fund based in Estonia, focusing on defense technology investments. Its principal objective is to develop the Estonian defense industry and advance innovative defense and security capabilities to address the growing global demand for new defense and security solutions. The fund also contributes to economic growth and diversifies access to capital for defense companies in Estonia and across NATO allies. For this purpose, investments are made in companies producing or developing products or technologies, or providing sector-specific services either exclusively for military use or for dual-use that can be used for both civilian and military applications. The fund invests in up to four already operating or soon to be established defense investment funds, with investments ranging from €3 to €20 million per fund. Specific requirements for these funds include being established as a limited partnership fund or other alternative investment fund in a NATO member country, with fund managers and related entities also established in a NATO member country. The fund manager and all related entities must not be established or operating in, nor shall their shareholders or investors be citizens of Russia, Belarus, or other countries on the FATF 'blacklist', UN sanctions list, or any other sanction or exclusion list applicable to the fund. The fund will not invest in enterprises that are established or operating in, or whose existing shareholders or new investors are citizens of Russia, Belarus, or other countries on the FATF 'blacklist', UN sanctions list, or any other sanction or exclusion list applicable to the fund. SmartCap Defence Fund has made several investments, including a €10 million investment in Darkstar Ventures Fund I, a pan-European venture capital fund focused on military and dual-use technologies tested on the battlefield in Ukraine. This investment represents an anchor investment for Darkstar and the first investment for SmartCap Defence Fund. Additionally, the fund invested in the Estonian-Ukrainian defense technology company Farsight Vision to enable the development of its product in Estonia and its expansion into international markets. The investment is directed toward Farsight Vision’s next development phase, focusing on broader automation in defense robotics, particularly in logistics, navigation, and systems management, as well as strengthening electronic warfare capabilities in both battlefield and critical infrastructure protection. SmartCap Defence Fund operates under an activity license issued by the Estonian Financial Supervision Authority and is a subsidiary of the Estonian Business and Innovation Agency. The Republic of Estonia is the sole unitholder of the fund. The fund's mission is to develop Estonia’s venture capital market by being a committed cornerstone investor in venture capital funds, addressing identified market gaps, and investing throughout economic cycles. The fund remains open as long as it has uncommitted resources available for investments and may amend the investment terms at any time, reserving the right to cancel or discontinue its investments in defense companies in its entirety at any time.