Earlybird and AVP launch €500m E2D fund for European defence-tech
Earlybird and AVP have launched E2D, a €500 million growth-stage fund targeting European dual-use and defence technology companies, in what the two firms describe as one of the most significant Franco-German investment collaborations in the continent's tech ecosystem. The fund's first close is scheduled for 30 June 2026, with limited partners drawn from large financial institutions and corporates. It plans to back around 20 companies at an average ticket size of approximately €25 million each.
The timing is deliberate. France has committed €76 billion to defence spending, Germany €152 billion, and the European Union has outlined an €800 billion continental defence plan. That structural shift in public spending has been building for several years, but private venture capital has been slow to follow: many European LP agreements historically prohibited defence-sector allocations, leaving fast-growing European defence-tech companies reliant on US investors to fund their scale-up phases. E2D is designed to redirect that capital flow.
Closing the sovereign-capital gap
"European defence is at a historic turning point, requiring a new generation of technology champions to safeguard sovereignty," said Benoit Fosseprez, General Partner at AVP. "The best European defence companies need investors who bring real sector conviction and pan-European reach; that's exactly what this partnership delivers."
The fund will invest across five operational domains: space, air, land, maritime and subsurface. Its scope explicitly spans both defence-native companies and dual-use applications, the latter covering technologies that serve military and commercial markets simultaneously. This dual-use framing is significant: it widens the investable universe considerably, drawing in sectors such as advanced sensing, autonomous systems, secure communications, and satellite infrastructure, where commercial and military procurement increasingly overlap.
AVP contributes a transatlantic growth-stage platform and more than €2.5 billion under management; Earlybird brings a 29-year European deep-tech track record, €2.5 billion in assets, nine portfolio IPOs, and 41 trade sales. The fund's strategic committee includes military leaders, NATO figures, and representatives from several European prime contractors, giving portfolio companies a direct route into procurement conversations that pure-play VC funds rarely provide.
The convergence angle: defence capital reshaping deep-tech formation
For cross-sector strategists, E2D matters beyond defence procurement. European venture capital's structural shift toward dual-use mandates is beginning to reshape how deep-tech companies are formed and funded from the earliest stages. Founders who might previously have steered clear of defence customers to remain palatable to ESG-constrained LPs now face a different calculus: sovereign-security imperatives are unlocking LP restrictions, and dedicated defence funds are offering growth capital at a scale that generalist European VCs rarely could.
That shift has downstream implications for adjacent sectors. Autonomous-systems companies that supply both logistics operators and armed forces, satellite communications firms serving both commercial telecoms and military command networks, and advanced-materials startups whose outputs enter both aerospace supply chains and combat platforms are all potential E2D targets. Capital flowing into these dual-use companies feeds the same technology pipelines that power civilian industries. In practice, a €25 million growth cheque into a European autonomous-drone platform has consequences for both NATO operational capability and the continent's commercial robotics and transportation-logistics sectors.
The broader macro picture is one of accelerating European digital sovereignty. The EU's defence spending commitments sit alongside its AI Act, its Chips Act investment programme, and growing political pressure to reduce dependence on non-European cloud and communications infrastructure. E2D is one piece of that larger architecture: private capital stepping in to fund innovation that public procurement budgets, and foreign investors, can no longer be relied upon to sustain alone.
Roland Manger, Co-Founder of Earlybird, framed the fund's commercial logic clearly: "This will foster a more resilient and sovereign European ecosystem and ultimately unlock superior value for investors." Whether a €500 million fund can materially close gaps against the scale of US and Israeli defence-tech ecosystems remains to be seen, but the structural conditions that kept European VC out of this sector for a decade are visibly unwinding.