UK defence prime BAE Systems invests €50m in VCs Lakestar, Expe…

British defence prime BAE Systems, which produces a range of military equipment from combat vehicles to naval guns, is investing €50m in European defence VC funds. This regional development has drawn attention from market participants. British defence prime BAE Systems, which produces a range of military equipment from combat vehicles to naval guns, is investing €50m in European defence VC funds.It will invest €25m each into Swiss VC Lakestar and Polish investor Expeditions, which are both actively investing in defence startups, including Isar Aerospace and Cambridge Aerospace, respectively.  The commitment brings Expeditions’ new fund, which is aiming to close in June, to more than €200m in commitments, cofounder Mikołaj Firlej tells Sifted.Lakestar has reportedly been raising a $300m defence fund since early last year.  AdvertisementBAE Systems told Sifted it could invest in more VC firms in the future.  The move to become an LP in defence funds is something BAE Systems has been “actively looking at” since February this year, Julian Cracknell, the chief technology and information officer at BAE Systems, told Sifted at the time; the company launched an incubator focused on spinning out internal research and IP into new startups and is investing “millions” into the programme.  “These latest investments show that we’re serious about supporting them as they look to play their part in delivering the technologies of tomorrow,” Dave Ewing, BAE’s head of technology commercialisation, said in a statement.Sector focus: General This development has significant implications for General, potentially influencing competitive dynamics, investment patterns, and strategic priorities across the sector. “Their strategy fits very well with our focus as we were looking for a strategic partner who could work with us closely to support defence tech companies and accelerate the integration of such companies into larger programmes,” he says.  “Based on our experience, BAE systems is one of the more innovative prime contractors who can move faster than many other incumbents, so we are pleased to partner with them.”  BAE’s move comes as some of Europe’s staid defence primes are increasingly looking to invest in, work with or acquire defence startups. Market ImplicationsForward-Looking IndicatorsContinued consolidation expected in the sectorIncreasing focus on digital transformation and innovationGrowing importance of ESG considerations Expert Commentary Looking AheadFor complete details on this development, refer to the original report from Sifted (Financial Times). Frequently Asked Questions