Time to look at defense technology with fresh eyes

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Keith Bonnici

Investment Director

At Tesi, we strive to create positive societal impact through our operations, whether it involves venture capital and private equity (VC & PE) activities or the development of the Finnish VC & PE market. With ongoing geopolitical uncertainty in the world, it is crucial that we also look at the defense industry and defense technology with a fresh perspective. This is significant not only from the standpoint of Finland’s overall security but also for new business opportunities.

Defense technology is closely linked with deep tech – especially in dual-use products* – that we have identified as a strategic investment theme. Our portfolio already includes companies developing high-tech dual-use products, such as Iceye, IQM, Varjo Technologies, and Dispelix. Additionally, we are a significant investor in Sisu Auto and Rauma Marine Construction, both directly involved in the defense sector. This familiar theme provides us with a strong foundation to explore sectors like AI, data, machine autonomy, and quantum technology as potential investment targets, centers of expertise, and collaboration arenas. These sectors are also among NATO’s technology priorities.

Beyond our investment activities, we are exploring ways for Tesi to develop and internationalize Finland’s defense industry ecosystem, particularly concerning dual-use products. Key to this effort is collaboration with domestic and international co-investors and Finnish networks such as FiBAN (Finnish Business Angels Network), VTT, Business Finland, and the Association of Finnish Defence and Aerospace Industries (PIA). Moreover, we actively aim to connect Finnish companies with Nordic, Baltic, and Ukrainian companies in the field, as well as with international investors. For instance, we co-organized the Pitch DefSec event in Riihimäki on June 7 and are a guardian partner for the Bridge of Trust event in Lviv, Ukraine, in September 2024.

In line with our strategy, we also aim to connect companies with EU funding. Noteworthy options for defense industry companies include:

Developing the Finnish defense technology sector should be both an economic and strategic investment.

Finland is a member of NATO, and in NATO’s Innovation Fund with Tesi’s investment. These memberships grant Finnish companies and investors access to broader defense industry networks, resources, and expertise. This can accelerate innovations, growth, and the development of our business ecosystem. Finland and NATO also collaborate on the DIANA accelerator and test center operations, which provide companies with testing opportunities and tools for technology development, thereby fostering growth. Such cooperation is essential to offer Finnish companies feedback from potential defense industry clients and potentially gain reference customers that enable market access.

Developing the Finnish defense technology sector should be both an economic and strategic investment. This strengthens supply security and technological independence, especially in uncertain times. Collaboration between companies and organizations is not enough; ministries and other governmental actors must also intensify their cooperation to enhance strategic development.

Investments in the defense industry, including Tesi’s investments, do more than just foster innovation and business growth. They also reinforce Finland’s strategic global position in defense technology. Through collaboration with other stakeholders, we can build an even stronger and more self-sufficient defense technology ecosystem.

* Materials, devices, and technologies that can be used for both civilian and military purposes.