Investing in European Resilience

by Uwe Horstmann, General Partner, Project A

At a time of profound geopolitical crises  and technological advances, the concept of resilience has never been more important for Europe. As we explore the nature of resilience, it’s clear that a multifaceted approach is needed – one that goes beyond traditional defense mechanisms to encompass economic stability, technological sovereignty, and societal adaptability. This comprehensive view of resilience is essential not only to maintain peace and prosperity, but also to ensure Europe’s ability to innovate and thrive in the face of global challenges.

Europe’s rich heritage of scientific discovery and technological innovation offers a unique opportunity to lead in the development and application of deep technologies. However, to fully realize this potential and secure its position on the global stage, Europe must overcome existing barriers to commercialization and foster a more unified and supportive innovation ecosystem.

An emerging ecosystem

Let’s face it: There is no better system for organizing innovation than capitalism. That is why the technology, finance and defense industries must work together to build an ecosystem of resilience across the continent.

This ecosystem must bring together players from the established defense industry and multinational corporations. From emerging startups and founders who want to start their own companies. From the financial sector: venture capitalists, banks and private equity firms. From society: policymakers, academia and the military.

It is only when all parts of society pitch in that true resilience can be achieved. That’s why we need to step up and create capabilities that did not exist before or were neglected in the past.

Key areas of technological resilience and sovereignty

As early-stage investors, we believe it is critical to strengthen technological resilience in three key areas:

• Defense and Security: The foundation of resilience, emphasizing the need for robust defense technologies and systems to ensure peace and stability in the face of evolving threats. Companies such as Helsing and Quantum Systems are examples of the next generation of successful European companies in the defense and dual-use sectors.
• Technological Sovereignty: Focuses on achieving independence in critical technologies to ensure Europe’s autonomy and economic stability amid geopolitical challenges and supply chain issues. The chip sector is one of the most prominent examples in Europe of heavy dependence on foreign players, which is now being addressed, especially in Germany with the construction of new chip plants. Young emerging companies like Black Semiconductor also have a role to play.
• Sustainable and self-sufficient infrastructure: Emphasizes the importance of developing sustainable, efficient and self-sufficient infrastructure, integrating advanced industrial production methods to promote economic resilience and environmental sustainability. This can be advanced robotics (Micropsi Industries) or the development of electric airplanes (Vaeridion).

There are certainly other areas that affect resilience in one way or another. However, this structure not only clarifies our approach to investing in European resilience, but also emphasizes the interconnectedness of defense, technological sovereignty and infrastructure in building a resilient future. By supporting start-ups and innovation in these areas, we aim to contribute to a Europe that is not only secure and independent, but also adaptable and forward-looking in the face of global challenges.Our commitment to these sectors reflects our belief in the power of deep technology and innovation to address some of Europe’s most pressing issues.

As we navigate this new geopolitical and technological landscape, our focus remains on identifying and investing in companies and technologies that will drive Europe forward and ensure its resilience and prosperity for generations to come.

The path to success: A shift in mindset

Our greatest asset in all this is people. Europe has an enormous pool of talent. People who want to work in technology and who are already building solutions for greater resilience. Ignoring certain industries or making them taboo is something we can no longer afford.

Nor can we do all this alone. As a continent, we need to continue to attract more and more talent from all over the world that can add value to this new ecosystem.

Governments must also do their part. Startups in the resilience space have a harder time than others because they mostly serve government customers. Long procurement cycles, bureaucratic barriers, and risk aversion are the additional obstacles to overcome – on top of the usual challenges a startup faces. What is needed for the resilience tech sector to thrive in Europe is a change in mindset and a greater commitment from governments to start using and implementing the solutions offered by the startups they are helping to fund.

Beyond funding, a customer relationship is particularly valuable. Solving the procurement problem leads to more capital in the system. The public sector has tremendous leverage through its purchasing power and the credibility that a government contract brings to an emerging technology company. That kind of credibility in turn attracts private sector money for future growth. So startups don’t need government funding, they need more government customers. In this way, we also achieve greater tech resilience in Europe.