Earlybird is entering into a VC alliance with AVP – and wants to strengthen the European arms market. What Earlybird partner Hendrik Brandis says about it.
A German-French alliance for more European sovereignty – at least that’s what the two VCs Earlybird and AVP are planning. Together they are launching E2D: a 500 million euro fund that will invest exclusively in so-called dual-use and defense startups from Europe.
The special thing about it: The fund is officially independent of Earlybird – but the VC firm acts as an active advisor on deals. Together with the French investor AVP (Atlantic Vantage Point), they want to finance up to 20 growth startups and end the European fragmentation in the defense market.
What exactly does that mean? Gründerszene followed up with Hendrik Brandis, general partner and founder of Earlybird.
Read too
Defense – formerly ugh, today hoo
In the past, investments in defense startups were not possible at Earlybird. The VC’s investors consciously decided against it at the time. “Our existing Earlybird funds were not allowed to invest in Defense because of ESG requirements – so a new, separate structure was needed,” says Brandis to Gründerszene.
This has now been achieved with E2D: it is not a classic earlybird fund, but rather an integration into an independent Luxembourg company. Earlybird and AVP would officially act as advisors in the fund.
Brandis emphasizes: “We believe that defense investments are necessary to strengthen Europe’s resilience – and that we as deep tech investors can make a real contribution here.” Defense investments are seen as socially sensible – even if there are different, including critical, perspectives.
Read too
Franco-German Alliance for Europe
Why is a European alliance necessary for this? Brandis has a clear opinion here: “Europe suffers massively from fragmentation – too many parallel systems. That’s why German-French cooperation was a central approach for us.”
A particular focus is on the growth segment. In other words, the phase of a startup in which it grows particularly strongly. There is a lot of potential here, says Brandis. The early stage area, on the other hand, is already comparatively well financed.
What is the exact structure of the fund and Earlybird’s role? Brandis says: “Formally the fund is based in Luxembourg – but we handle the sourcing and investment processes.” This means: E2D is not a classic earlybird fund, but the German VC regularly acts as an investor.
Dual use: no marketing, but exit strategy
The dual-use character is crucial for E2D. “We don’t want to just depend on the defense market,” says Brandis. That’s why we’re specifically looking for companies with a unique technological position, whose solutions have both commercial and military applications and can scale in large markets.
Read too
European DNA and objectives of the fund
E2D is only active in Europe. And there is a reason for that, says Brandis: “For us, this is the basis for technological sovereignty.” But there are no limits to the sale of the technology, he emphasizes: “There is no restriction that portfolio companies can only sell to EU or NATO countries – on the contrary, global demand is a signal of quality.”
State investors are not currently on board. “So far the capital has come primarily from corporates and institutional investors,” says Brandis. Therefore, returns continue to have top priority as a central responsibility towards investors. According to the Earlybird founder, a “security policy effect” arises automatically – that is why it would not be made into a KPI.
