Luxembourg backs defence innovation with €150m fund

The National Defence Fund, presented jointly by Minister of Finance Gilles Roth, Minister of Defence Yuriko Backes and Minister of the Economy, SMEs, Energy and Tourism Lex Delles, will support startups, scaleups and innovative companies operating in the defence and dual-use sectors (technologies with both civilian and military applications). It forms part of Luxembourg's Defence Industry Strategy and will be implemented by the Société Nationale de Crédit et d'Investissement (SNCI), Luxembourg's public banking institution.

€150 million for defence innovation over five years

The State and the Luxembourg Intergenerational Sovereign Fund (Fonds souverain intergénérationnel du Luxembourg) will together contribute €75 million to the fund, while the SNCI will commit a further €75 million in co-investment, bringing the total commitment to €150 million over five years.

Investment activity will target the strategic sectors identified in the national defence strategy:

• cybersecurity
• space
• advanced materials
• automation

The fund will consider both investment fund proposals and direct co-investments in companies alongside eligible funds, with a clear mandate to foster economic activity in Luxembourg.

Three complementary strategic objectives

The National Defence Fund pursues three aims:

1. Strengthen economic activity in Luxembourg, particularly through innovation and ecosystem development
2. Contribute to the country's defence and security spending commitments, in line with NATO objectives
3. Generate economic returns on investments made

Investment decisions will be taken by a dedicated investment committee, and the fund will draw on the long-standing cooperation between the SNCI and the European Investment Fund (EIF).

Positioning Luxembourg in critical technology value chains

The National Defence Fund is designed to reinforce Luxembourg-based investment capacity, support domestic companies and attract new activities, while generating qualified jobs, particularly in research and development.

Mr Delles framed the initiative as a decisive step in positioning Luxembourg in critical technology value chains. “The National Defence Fund is a strategic lever to strengthen our economic fabric and position Luxembourg as a key player in innovation in critical fields,” he said. “Through this initiative, we are pursuing an approach already under way to make defence and dual-use technologies a priority area of economic development, with the ambition of positioning Luxembourg as a genuine innovation hub by supporting the development of innovative projects and facilitating the integration of our companies into European value chains.”

Photo credits: © MFIN