Deutsche Telekom-backed DTCP’s €500m Project Liberty fund already has more than half the funds committed as Europe's investors zero in on defence spending.
DTCP, the investment manager backed by telecommunications firm Deutsche Telekom, is seeing an enthusiastic response to its recently announced defence tech fund, a sign of how approaches to the industry have changed in Europe, says CEO Vicente Vento.
“We’re targeting €500m and we have €300m in commitments already,” Vento says. “The response has been very, very strong.
“We’ve now got an incredible pipeline of people who have reached out post-launch and said: ‘Hey, this is this is fantastic, there’s nothing like this in Europe at the moment. Can we have a conversation?’ Those conversations are progressing and, from where I stand right now, I think we have a good shot at getting to that target relatively quickly.”
The fund, dubbed Project Liberty, was officially launched last month with a brief to invest in growth-stage startups developing technologies that are strategically relevant to European security. This isn’t so much weapons manufacturers as it is a company like Quantum Systems, Vento says.
Formed just over a decade ago, the Germany-based startup began by developing drone surveillance systems for industrial use but has now adapted them for use in battlefield monitoring. It closed its last round at a $3.5bn valuation in November with backing from DTCP as well as Deutsche Telekom’s T.Capital unit and fellow German corporates Hensoldt and Porsche.
Vento (left) says part of the rationale for establishing the fund was commercial. DTCP has historically been a big investor in enterprise software, but with increasing speculation about the future viability of that sector, there is a need to explore new, potentially more profitable areas.
But the Ukraine conflict, and the US-led rebalancing of NATO commitments, means that not only is there a larger market for defence tech, it is now also easier to justify conceptually, because investing in the build-out of European defence capabilities is increasingly being viewed as necessary for defending European democracy.
“In the past, it was always like, ‘we don’t want to invest in weapons, we don’t want to invest in things that potentially kill people, etc,’” Vento says. “Right now, that dialogue has changed towards ‘we have to build up our strengths so we can protect our values and what we stand for’. So, in a way, we’ve moved into that open door with this new fund.”
And European companies are beginning to raise significant sums for defence tech. Another autonomous drone startup, Harmattan AI, announced a $200m series B round led by aerospace manufacturer Dassault Aviation just a few weeks ago, adding to hefty nine-figure rounds by autonomous defence technology developer Helsing and maritime perception technology provider Tekever last year.
Vento says Europe’s defence industry has not evolved much over the last 20 or 30 years, partially because it lacked investment but also because governments have been notoriously slow with testing and procurement. That is changing too. There is a sense of urgency that has led to “a massive acceleration” in those decisions, and when you add that to Europe’s strengths in technology, the continent is in a healthy place.
“There is a very strong European technology ecosystem, especially in this industry,” Vento says. “There are a lot of people who have come out of engineering. There is a ‘right to win’ in Europe, because I think in Europe we’re particularly good with physical stuff and hardware.
“And so, while the US has really excelled in software and everything that is – let’s call it asset-light – I think over here we know how to develop a drone, and the flying dynamics, and Germany has an incredible history of doing that.”
Recent DTCP-backed startup funding rounds. See all the corporate-backed startup deals the full CVC Funding Round Database
Why defence tech is becoming more strategic for corporates like Deutsche Telekom
DTCP now operates as an independent firm, but it was spun off by Deutsche Telekom under Vento a decade ago to invest in both digital infrastructure like data centres and mobile towers as well as companies focusing on the digital transformation. Deutsche Telekom is still a significant investor in each DTCP fund, but the firm now has a network of nearly 50 limited partners including other corporates.
“[Deutsche Telekom] typically takes a large minority of new funds that we launch,” Vento says. “Which is very helpful for us because it’s like anchoring the fund, so with that money and a little bit more we can just go into the market and start deploying capital. We gain momentum, we get visibility, we start doing transactions and then we can raise more money on the back of that.”
The company is also a significant investor in Project Liberty. Defence tech may not seem like an automatic fit for a telecoms firm, but its everyday business involves providing secure connectivity lines, and the corporate also has a dedicated cybersecurity operations centre that monitors the group’s security while offering similar services to both business customers and governments.
“When we brought it to Deutsche Telekom, I [thought]: ‘A corporation is going to be worried about reputational issues and so on, so forth’,” Vento says. “And very much to my surprise, their response was like, ‘This is great, it completely fits what we want to do and how we want to position ourselves’.
“They are doing a lot of initiatives in that space. They have a lot of dialogue with a lot of governments across the world and they are a provider of systems to many segments, companies and governments in that in that space. So, it did resonate with them and ultimately, they decided to back us up.”
Vento says Project Liberty’s backers so far include other corporates as well as traditional institutional investors and sovereign wealth funds. But while ethical considerations may not be the priority they have been in previous years, that does not mean there are no concerns about what their money will be funding.
Vento cites Israel as an example of a market where the technology ecosystem is explicitly linked with defence – but there are vast moral questions about what that ecosystem is supporting. How can Project Liberty’s LPs be sure the technology that is funded is used responsibly?
Vento says Project Liberty has ground rules in terms of where it invests – each portfolio company has to align with “European values,” but he argues that enterprise software itself is already being used in military applications. The aim of this fund is to back dual-use technologies that can be used in peacetime, both for civilian purposes and to enhance security, and the reality is that these are sophisticated technologies where civilian use cases will be well ahead of those in the defence industry.
“Our priority is to find companies that can excel in both times of peace and in times of war. What we’re trying to avoid, with the purpose of the fund, is war.”
One recent example of how this can play out is the increasing incursion of drones into European airspace, which have led to the temporary closure of airports in several countries. European radar systems were built to detect large aircraft, Vento says, but a startup with advanced technology that can detect low-altitude drones can be used to help secure that infrastructure and prevent disruption to air travel.
“Our priority is to find companies that can excel in both times of peace and in times of war,” he says. “What we’re trying to avoid, with the purpose of the fund, is war, right? It’s all about deterrence and strengthening capabilities, and it’s all about modernising existing technologies so the continent can be well prepared, to avoid any potential escalation or conflict.
“That’s the way that we think about it. By definition, these companies will necessarily be selling to governments and military forces, but they will also be selling to security agencies that are there for peacetime, and to other corporations.”
Read more about what’s happening in European defence tech:
BAE Systems to turbocharge defence tech spinouts from academic research
The company’s new incubator plans to spin out companies based on academic research as well as its own technologies developed in-house.
James Fisher scouts for startups that provide undersea protection
Maritime services company James Fisher launched a new corporate VC arm to look for new undersea technologies.
Build local, acquire faster: defence investment trends for 2026
Investment in defence startups is increasing rapidly with many nations developing their own critical technology supply chains.
