Stenbock House, 2 May 2024 – The Estonian government has supported the proposal of Prime Minister Kaja Kallas to create a defence industry fund. This fund will invest directly and through private funds in companies developing defence-related or dual-use technologies. The initial volume of the fund will be 50 million euros, which can be increased if the fund proves successful. The fund is planned to be launched in 2024.
“We decided with the government to create a defence industry fund in the extent of 50 million euros which will strengthen Estonia’s security and help boost the economy,” said Prime Minister Kaja Kallas. “Estonia has a very highly developed technology sector, but there is a market failure in the use of this capacity to increase our national security. The state can help with seed funding here.”
The support of the fund will provide the Estonian defence industry companies an opportunity to develop and bring innovative products to the market. In addition to strengthening the Estonian security, the creation of the fund also means creating jobs with a high added value, as well as an even faster development of the Estonian technology sector.
Tiit Riisalo, Minister of Economic Affairs and Information Technology, also highlighted the positive impact of the defence industry fund on the development of the Estonian technology sector and on the economic growth. “The fund will support the target of the economic plan which was published in March to double the volume of the Estonian economy by 2035. New investments are important for the development of the defence industry, as they support the companies of the field in developing innovative technologies and marketing new solutions,” said Riisalo.
Minister of Defence Hanno Pevkur remarked, “Establishing the defence industry fund is certainly a great and positive step for the development of the local defence industry and for strengthening the Estonian defence capacity.” He added that the development of the Estonian defence industry can be accelerated by the military aid provided by Estonia to Ukraine.
The defence industry fund will start making direct investments into the equity of the companies developing defence technologies or technologies with dual use. The fund will mainly be investing in companies which are operating in Estonia and will be making investments in the extent required to alleviate excessive risks for the companies to be attractive for private capital. The detailed terms and conditions of the fund will be developed by the Ministry of Economic Affairs and Communications and the government plans to discuss them in July.
