The most recent NATO summit moved the needle on member nations’ commitment to defense spending, jumping from representing 2% of GDP to up to 5%. This is set to increase fundraising opportunities for defense companies and could have positive impacts on countries affected by war, like Ukraine.
The new spending goal is likely to bolster defense companies involved in deep tech. Deep tech companies are those aiming at cutting-edge scientific and engineering breakthroughs, rather than those focused on consumer end-use. However, the most attractive deep tech companies are those dubbed “dual use” meaning their tech could be utilized by both the military and civilians, posing less of an ESG problem for investors.
Rupert Cocke, Mergermarket’s senior editor based in Barcelona, joins Dealcast host Julie-Anna Needham to discuss the outlook for European defense sector dealmaking including:
- Which defense-related companies have already undergone significant raises, like Multiverse Computing’s around EUR 190m funding round in June
- How some private equity firms’ early involvement in deep tech could help curb risks from uncertain wait times related to research and development
- Why certain firms are already bullish on investing in reconstruction and restoration in Ukraine
- Why ESG standards may be restrictive for LPs looking into defense investments and may favor more dual-use or cybersecurity-focused companies
All this and more in this week’s Dealcast.
