Key Takeaways
- • The European Investment Fund (EIF), part of the EIB Group, is managing the Defence Equity Facility 2.0 (DEF 2.0), a pan-European fund-of-funds with an initial fundraising target of €1 billion to support 25 to 30 funds.
- • DEF 2.0 broadens the pilot's focus to three domains (defence, space and cybersecurity) and four asset classes: venture capital, private equity, private credit and defence infrastructure.
- • Capital deployment begins once commitments reach €250 million at the first closing, with the subscription period open for at least 24 months.
- • Current fundraising is limited to Member States with a minimum ticket of €50 million; institutional and private investors are scheduled to join at a later stage.
- • The initiative builds on the 2024 pilot, which had a €175 million allocation (€100 million from the European Defence Fund and €75 million from the EIF) targeting a total of €500 million in mobilised investment.
Summary
The European Investment Fund (EIF), part of the EIB Group, is managing the Defence Equity Facility 2.0 (DEF 2.0), a pan-European fund-of-funds instrument. The commitment was unveiled on the sidelines of the Eurogroup and ECOFIN meetings in Brussels, joining commitments already confirmed by the EIB Group and several Member States, including Lithuania and Bulgaria. European Commissioner for Defence and Space Andrius Kubilius said the instrument is intended to enable European defence technology companies to "count on European capital to grow, develop, and deliver the critical capabilities needed by Armed Forces."
DEF 2.0 is an evolution of the pilot launched in 2024 under InvestEU. It targets an initial fundraising goal of €1 billion to support between 25 and 30 funds. The programme integrates four asset classes (venture capital, private equity, private credit and defence infrastructure) and extends its focus from defence alone to defence, space and cybersecurity. Funds backed through the Fund Accelerating Supply Chain Transformation (FAST), a component of the European Defence Industry Programme (EDIP), will invest in growth-stage companies established in the EU or Norway that industrialise or produce defence goods or form part of European supply chains. The initiative is part of the EIB Group's TechEU programme and operates alongside the second edition of the European Tech Champions Initiative (ETCI 2.0).
The structure combines resources from Member States, including through national promotional institutions, with core funds from the EIB Group and the European Commission, and potentially private sector capital. In the current phase, fundraising is open only to Member States with a minimum ticket of €50 million, while institutional and private investors are scheduled to join later. Fund manager eligibility criteria from the pilot remain in force. Capital deployment starts once commitments reach €250 million at the first closing, which according to the EIB press release is expected shortly.
DEF 2.0 also includes the DEF Exchange (DEFX), a platform restricted to instrument contributors that will host workshops, thematic sessions and networking to connect national stakeholders, investors and defence market operators. The European Cyber Security Organisation (ECSO) and other European entities will support the platform. The launch is presented by the EIB Group as a contribution to the Savings and Investments Union. According to the annual investment survey released on November 9, 78% of security and defence sector firms are maintaining or increasing investment, and 19% bring innovative products to market, compared with 10% across all businesses.
The 2024 pilot had a €175 million allocation, comprising €100 million from the European Defence Fund and €75 million from the EIF, with a goal of mobilising €500 million for European defence companies. It targeted dual-use technologies across areas including cyber, space, aerial, land, naval, underwater, CBRN defence and C4ISR. The EIF's sector rules, currently under revision, exclude direct investment in weapons or ammunition products. The EIF invests as a limited partner, with commitments of at least 7.5% of a fund's closing target and generally no more than 25% of fund size. Selected funds must invest at least twice the EIF amount in target companies, up to 80% of fund size. Managers must be independently managed, headquartered in the EU or Norway, and not controlled by non-EU or third-country entities. Applications are submitted via the EIF website.
DEF 2.0 is an evolution of the pilot launched in 2024 under InvestEU. It targets an initial fundraising goal of €1 billion to support between 25 and 30 funds. The programme integrates four asset classes (venture capital, private equity, private credit and defence infrastructure) and extends its focus from defence alone to defence, space and cybersecurity. Funds backed through the Fund Accelerating Supply Chain Transformation (FAST), a component of the European Defence Industry Programme (EDIP), will invest in growth-stage companies established in the EU or Norway that industrialise or produce defence goods or form part of European supply chains. The initiative is part of the EIB Group's TechEU programme and operates alongside the second edition of the European Tech Champions Initiative (ETCI 2.0).
The structure combines resources from Member States, including through national promotional institutions, with core funds from the EIB Group and the European Commission, and potentially private sector capital. In the current phase, fundraising is open only to Member States with a minimum ticket of €50 million, while institutional and private investors are scheduled to join later. Fund manager eligibility criteria from the pilot remain in force. Capital deployment starts once commitments reach €250 million at the first closing, which according to the EIB press release is expected shortly.
DEF 2.0 also includes the DEF Exchange (DEFX), a platform restricted to instrument contributors that will host workshops, thematic sessions and networking to connect national stakeholders, investors and defence market operators. The European Cyber Security Organisation (ECSO) and other European entities will support the platform. The launch is presented by the EIB Group as a contribution to the Savings and Investments Union. According to the annual investment survey released on November 9, 78% of security and defence sector firms are maintaining or increasing investment, and 19% bring innovative products to market, compared with 10% across all businesses.
The 2024 pilot had a €175 million allocation, comprising €100 million from the European Defence Fund and €75 million from the EIF, with a goal of mobilising €500 million for European defence companies. It targeted dual-use technologies across areas including cyber, space, aerial, land, naval, underwater, CBRN defence and C4ISR. The EIF's sector rules, currently under revision, exclude direct investment in weapons or ammunition products. The EIF invests as a limited partner, with commitments of at least 7.5% of a fund's closing target and generally no more than 25% of fund size. Selected funds must invest at least twice the EIF amount in target companies, up to 80% of fund size. Managers must be independently managed, headquartered in the EU or Norway, and not controlled by non-EU or third-country entities. Applications are submitted via the EIF website.
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