Introduced by Andreas Munk Holm, this EUVC Live at GoWest series spotlights the thought leadership of policymakers, institutional investors, GPs, corporates, and public capital leaders around one defining question:
How does Europe mobilize its own capital to secure its technological future?
Across the sessions, one theme emerges repeatedly:
Europe does not lack talent.
It does not lack innovation.
It does not lack savings.
It lacks coordination.
Is Europe’s defense investment wave real, or is it simply venture capital wrapped in a Ukrainian flag?
That question framed one of the most direct and intellectually honest debates in European venture this year. Two experienced investors took opposing views on a subject that has shifted from taboo to strategic necessity in just a few years: how Europe should finance defense technology.
The debate featured Nicholas Nelson, General Partner at Archangel Ventures, and Sebastian von Ribbentrop, Founding Partner at Join Capital.
At stake is more than narrative. It is about capability, returns, sovereignty, and the structural future of European capital markets.
The Context: From Taboo to Trend
Until recently, defense investing in Europe was controversial. Many institutional LPs avoided the sector entirely. ESG mandates were interpreted narrowly. Defense was often repackaged as “dual-use” to soften its optics.
Russia’s invasion of Ukraine changed the landscape. Defense budgets increased. Political rhetoric shifted. Venture capital began flowing into European defense startups at unprecedented levels.
But the underlying question remains: is this a structural shift in capital allocation or a short-term momentum trade?
The debate crystallized around a central fault line: defense-first versus dual-use.
The Defense-First Argument
Nicholas argues that Europe’s reluctance to embrace defense-first investing is both strategically and financially misguided.
His position rests on several claims:
Early-stage defense-only companies have historically outperformed dual-use peers by significant margins.
Dual-use strategies often dilute focus by requiring two distinct go-to-market approaches.
True capability development requires designing directly for the warfighter, not adapting commercial products for military applications.
Europe lacks the cultural and capital conviction to back pure defense plays early and consistently.
The core argument is that building for defense from inception creates clearer product-market fit, stronger procurement alignment, and ultimately superior financial returns. Attempting to straddle both markets from day one can lead to compromised engineering and a bifurcated organizational focus.
In this view, dual-use in Europe often functions as a reputational hedge rather than a strategic one.
The Dual-Use Counterargument
Sebastian offers a different perspective. From his vantage point, dual-use is not a cop-out; it is a risk management strategy.
His case emphasizes:
Software and advanced technologies can serve both industrial and defense customers without duplicating entire teams.
Diversifying revenue streams reduces customer concentration risk.
Non-dilutive defense contracts can replace late-stage equity rounds.
Europe’s comparative advantage lies in subsystem suppliers rather than vertically integrated primes.
The European industrial landscape is fragmented. Large, unified defense platforms comparable to US primes are rare. Instead, Europe has deep expertise in high-precision subsystems and specialized components. Dual-use companies can embed themselves across multiple value chains.
In this framework, defense-first may narrow the addressable market too early, particularly in a region with fragmented procurement regimes and uneven defense budgets.
The Structural Question: Capital and Scale
Beyond product strategy lies a more difficult issue: growth capital.
Even where early-stage defense investment has improved, later-stage funding in Europe remains limited. Several of the most prominent European defense startups have relied heavily on US or Middle Eastern growth capital.
This raises uncomfortable questions:
Can Europe build an independent defense champion without foreign growth capital?
Will companies inevitably “pick a flag” as they scale?
Is fragmentation across 30-plus procurement environments Europe’s structural disadvantage?
Comparisons to Palantir, SpaceX, Helsing, and Anduril illustrate the point. The United States offers a single, unified Department of Defense with substantial procurement budgets and consistent demand signals. Europe does not.
Without scale coordination, even strong early-stage ecosystems struggle to produce global champions.
Platform vs. Subsystem
Another layer of the debate concerns strategic positioning.
Should European founders attempt to build full-stack defense platforms? Or should they focus on specialized subsystems that integrate into broader NATO or allied architectures?
Defense platforms require large contracts, political backing, and integrated procurement. Subsystems, by contrast, can sell into multiple primes across jurisdictions.
Europe’s historical strengths suggest a leaning toward the latter. But sovereignty ambitions often demand the former.
Capital Allocation Under Pressure
The most important takeaway from the discussion is that this is not about virtue signaling.
Defense investing today sits at the intersection of geopolitics, institutional capital, public policy, and venture returns. The moral dimension cannot be ignored, but neither can the structural realities of capability development.
Europe faces a strategic choice.
It can treat defense as a short-term thematic allocation, softened through dual-use language. Or it can build the capital infrastructure, procurement coordination, and growth-stage funding necessary to support genuine defense-first champions.
Either path requires clarity.
Because in the end, this is not about branding.
It is about whether Europe intends to control its own security technologies and whether its venture capital ecosystem is prepared to finance that ambition.
Under geopolitical pressure, capital reveals its priorities.
