Europe just ripped up its tech playbook to start directly funding military defense startups

In a historic shift that fundamentally alters how the continent handles innovation, the European Union is officially opening its wallet to the defense industry. Breaking from a long-standing tradition of strictly funding civilian projects, the European Innovation Council (EIC) is pivoting to directly finance military and dual-use technologies.

A new era for European security

For decades, European innovation funds have kept a rigid wall between civilian research and military applications. However, escalating geopolitical pressures and a push for technological sovereignty have forced a massive strategic rethink.

According to an official announcement from the European Commission, the EIC has adopted an amendment to its 2026 work program, effectively implementing the new “Defence Mini-Omnibus.” This policy shift allows startups and small-to-medium enterprises (SMEs) developing dual-use tech—innovations like AI, quantum computing, robotics, and advanced materials that have both civilian and military applications—to tap into massive funding pools. Eligible companies can now secure grants of up to €2.5 million alongside direct equity investments reaching €30 million.

Direct equity for defense tech

The most aggressive move in this new strategy is the launch of the €100 million STEP Defence Scale Up call.

As detailed by the EIC, this marks the very first time an EU funding program will provide direct equity financing to defense companies. The fund is specifically targeting startups focused on critical security infrastructure, including air and missile defense systems, drones, and counter-drone technologies. By co-investing in major funding rounds, the EU aims to accelerate the industrial scale-up of its defense sector, actively ensuring the continent doesn’t fall behind in the global race for autonomy.

This article is made and published by Asger Risom, who may have used AI in the preparation