As the UK defence sector braces for the publication of the Defence Investment Plan, the country’s biggest defence prime is spreading its bets.
BAE Systems has announced that it will invest €50 million into two of the more prominent European venture capital funds that are backing defence tech startups. Expeditions and Lakestar will each receive funding of €25 million into their latest funds to back startups across the European continent, BAE said.* These are the prime contractor’s first investments as an LP into VC funds.
The move comes at a charged moment in the UK. Last week, the country’s defence secretary and a high-ranking minister both resigned from their roles in protest and alarm over the small size of the defence budget in the unpublished DIP: reportedly it was £13 billion, less than half of what had been recommended in a report the government itself published in 2025. This week, the UK is meeting with other G7 countries to talk defence in the wake of that. The DIP has yet to be released, so it may be that yet more modifications will be made.
One of the biggest issues that the UK faces right now is that it’s facing larger budget problems: among them, high debt, sluggish economic growth, and other social services and infrastructure in need of upgrades and funding. The Strategic Defence Review, the report that originally suggested a five-year budget of £28 billion to help get the MoD right-sized to address national security, also said getting more out of the startup ecosystem to improve unit economics and build more innovation into the system. Startups and funding the VCs that back them is one potential answer to that call.
“Europe is at a pivotal moment in redefining its security and technological sovereignty and supporting the next generation of defence-tech founders will be critical to that effort,” noted Klaus Hommels, the founder of Lakestar, in a statement.
BAE says that its €50 million LP investment is part-two of its Launchpad initiative to back more innovation and startups in general. Part-one was announcing an incubator back in February 2026, which BAE has set up to spin out some of the technology that is being developed at the company into dual-use startups.
The first startup out of the programme is Rho-C, which is productising the ability to send power and data through solid materials, eliminating the need for drilling holes and using wires. The wireless tech was initially developed for submarines, and the idea is that it can be sold to other sectors such as oil and gas and energy. Rho-C was raising its first round of February.
Lakestar is reportedly in the middle of closing a new fund for defence investments, and that is where this investment will go. Expeditions has already said that this will be going into Expeditions II.
“European defence-tech can drive the most transformative shift for our continent in a generation and Expeditions has been investing with this conviction for years. Our security can no longer be assumed; it has to be built. Its architects will be the founders deploying innovative products at scale, in weeks and months rather than years, drawing on lessons from the frontline,” said Mikolaj Firlej, co-founder of Expeditions and one of its general partners, in a statement. “Our combined force, equipped with greater resources, will invest with the discipline and urgency our security demands.”
In the last two weeks, we have seen a number of partnerships announced between primes and smaller startups, mutually-beneficial moves to help the smaller companies scale up and sell to government customers; and larger companies to tap into more innovation. Acting as a strategic investor in startups, directly or as an LP, is another classic way that large corporates have sniffed out new tech for partnerships and potential M&A. That is what is playing out here, too.
“As a large defence company, we’ve always valued the capability and ingenuity that early-stage founders can bring to the table and these latest investments show that we’re serious about supporting them as they look to play their part in delivering the technologies of tomorrow,” said Dave Ewing, head of technology commercialisation at BAE, in a statement.
These are BAE’s first investments as an LP in VC funds. PitchBook notes that it is a backer of the government accelerator Innovate UK. It has also invested in some other startups directly, including Oxford Dynamics, the developer of autonomous systems for defence and security. We have contacted the company to ask for more details and will update this story as we learn more.
*Note: Partners at Lakestar and Expeditions both invest in Resilience Media in an individual capacity. This does not impact any editorial decision regarding story selection.
