It was a former Ukrainian Chief of the General Staff who put the awkward truth to Britain’s General Sir Roly Walker.
Russia, argued the Ukrainian official, would only take Western deterrence seriously when it saw “factories producing at wartime production rates,” said Sir Roly. His conclusion was equally stark. “Industry and the world of finance must become the fourth arm of defence,” he said.
Western security, defence technology and private capital are becoming more closely connected than at any point in recent decades. Across Europe, a rapidly growing investment sector is funding technologies that support the continent’s security. In 2025, according to the NATO Innovation Fund, European defence, security and resilience start-ups secured a record $8.7bn to address critical gaps. If private capital is now part of the defence system, then the resilience of that capital matters too.
Defence technology is attracting extraordinary amounts of capital. Cambridge Aerospace, founded in 2024, recently raised $300 million at a $3.4 billion valuation, while Quantum Systems raised $1.2 billion at a valuation of roughly $8 billion. Initiatives such as the British Army’s Task Force RAPSTONE show how the MoD is trying to accelerate the journey from emerging technology to operational capability.
Venture capital is fuelling the drive to greater lethality and survivability. Founders need investors willing to trust them to build an idea, hire engineers, secure infrastructure and take a product to market.
But venture firms in turn need family offices and funds to trust them to deliver returns. In exchange, founders share sensitive insight into technologies, commercial models and sometimes critical military capability gaps. There is a complex landscape of relationships and dependencies that changes day on day.
Governments already recognise the provenance of strategic investment as a national-security issue. The UK’s 2025/26 National Security and Investment Act report shows that defence accounted for 58% of notifications accepted or rejected under the Act and 47% of acquisitions called in for closer scrutiny.
The EU has likewise strengthened its foreign-investment screening regime to capture indirect investment, including EU-based investors ultimately controlled by non-EU individuals or entities.
Acquisition is only part of the story
Minority investments can create information rights, board or observer access, commercial visibility or influence. The problem is not simply who owns what. If an investor has hidden links to a hostile state, even a small holding may matter.
The system relies on trust. But it cannot rely on trust alone. Beyond an immediate circle of friends and family, who really knows who? As the Russians themselves say, doveryai no proveryai. Trust but verify.
Conversations with venture capitalists over the last six months reveal how difficult it can be to understand counterparty risk using existing tools.
Significant financial decisions with national-security implications are being made on a scarcity of information. One Baltic fund describes spending considerable time and money resolving apparent exposure to Russian nationals in a cap table, only to establish who the individuals really were, where ownership sat and whether relevant state relationships actually existed.
Complex fund structures, offshore vehicles, nominees and layered ownership are commonplace and usually legitimate. But they can make it much harder to work out who ultimately sits behind the money; and easier for someone who wants to stay hidden.
Sanctions screening may satisfy one element of a company’s compliance obligations, but a clean result is not the same as understanding ownership, influence or exposure.
The information needed to understand these risks is fragmented across corporate registries, media, patent records, legal cases, insolvency data and adverse media. Names may be misspelt or transliterated differently across languages and jurisdictions. Standard compliance tools help, but they can produce false matches and still miss relationships that matter.
Traditional due diligence can answer many of these questions. The problem is that it takes time, costs money and usually tells you what was true on a particular day. Even good research begins to age from the moment it is completed.
Stakes are sold, funds acquire new partners and relationships change. Too rarely is there dynamic monitoring to alert investors or founders when the picture changes.
Many smaller funds cannot justify maintaining dedicated intelligence teams, so complex investigations sit alongside the normal responsibilities of already stretched investment professionals.
Investment committees are making high-consequence commercial decisions that can increasingly carry national-security implications, yet too often they lack the evidence to make those decisions with confidence.
AI can help. Agentic systems can interrogate information at a speed and scale that would previously have required large investigative teams. But speed is not assurance. When the evidence is thin, AI can confuse two people with the same name, assume a relationship that is not there, or sound far more certain than the evidence justifies. Investors need to know where the evidence came from, what remains uncertain and where human judgement is still required.
The commercial consequences of getting it wrong can be severe. As one Estonian VC said: “If my fund is discovered to have inadvertently accepted Russian finance, I will not be able to raise another round.”
A Channel Islands VC described the opposite problem: potentially good investments are sometimes passed over because uncertainty around ownership, influence or source of funds cannot be resolved with sufficient confidence.
Europe cannot afford to slow private investment into defence. It needs more capital and it needs it quickly.
But speed cannot come at the expense of visibility. If finance is becoming the fourth arm of defence, investors need to understand who ultimately sits behind that capital, what influence it brings and when the picture changes. A check made at the start of an investment is no longer enough.
Jamie Burnham is Head of Advisory at DarkSkope, a Belfast-based intelligence technology company. He is a former diplomat, with 25 years’ experience in defence and national security.
