Oct 22, 2025

As Russia scales its drone war machine (2m+ short-range annually), the Nato Innovation Fund (NIF) run by Sander Verbrugge and showcased at the Bloomberg's Luxembourg Investment Summit, deploys €1bn to empower deep tech startups to develop innovative defensive systems—from AI scalers (Fractile) to autonomous naval drones. “Russia is industrialising its war machine. It can build over 50,000 long-range drones in the year and over 2 million short-range drones and is not afraid to deploy them,” said Sander Verbrugge, partner at the Nato Innovation Fund (NIF). He commented that NIF is a mission-driven venture capital fund established to counter increasing global threats, such as the war in Ukraine, “verified incursion” in Nato airspace and the widespread use of autonomous systems. These concerns are fuelled by capabilities like those displayed by Russia, which is industrialising its war machine to produce over 50,000 long-range drones and over 2 million short-range drones annually, enabling peak days of up to 800 drone attacks. Publicité The NIF aims to be a key part of the defence, security, and resilience (DSR) ecosystem. It operates in a growing environment where investment levels have reached $5bn to $8bn. “[For investment managers], that's not that much money, but for innovative companies that are looking for 10 million in the first round, this is quite a lot of money.” Fresh money to be spent on prime and startup companies Due to the allied commitment to increase defence spending, the European defence industry—currently about €100bn—is projected to see market growth that could triple, potentially adding €400bn to €800bn in market value, Verbrugge calculated. a typical deep tech company can easily spend up to $100m to $200m before they actually have their product going into the market Sander Verbrugge partner Nato Innovation Fund The NIF focuses on ensuring a significant portion of this capital goes toward innovative technology companies, not just established industrial players (primes). Verbrugge explained that the NIF was spawned out of Nato and is backed by 24 allied nations, operating as an independent, 15-year standalone fund with €1bn in financial firepower. Verbrugge expects the capital to be deployed based on three core pillars: achieving commercial success, supporting capacity building across Europe to foster the VC ecosystem, and, crucially, serving the armed forces by ensuring the adoption of innovative defensive products, such as autonomous naval systems and drones Long-shot investments He explained that the fund focuses on deep technology companies, which often require long development timelines (up to five or eight years) and substantial capital, making partnership with other VCs essential, as “a typical deep tech company can easily spend up to $100m to $200m before they actually have their product going into the market.” Since its incorporation in 2022, Verbrugge stated that the NIF has established relationships with the European Investment Funds and Ministries of Defence and Finance of allied nations. The fund has received interest from over 3,000 startups and has built a dedicated team of industry experts, some of whom have military experience, to bridge the gap between defence requirements and startup innovation. Verbrugge highlighted that the investment priorities of the fund fall across defence and security (including cyber security and infrastructure security) and broader resilience (covering energy resilience, supply chain dependence, and raw material reliance). The NIF has made 20 investments and seeks to deliver capability, independence, and security by supporting promising and strategic technologies. The fund invested into Fractile which is focused on trying to build an AI scaler. Verbrugge commented that he previously worked in the semiconductor industry before starting venture capital and acknowledged that building an AI scaler is “very hard to do.” The ambition level and future potential of the company are key drivers for the investment. Fractile aims to build semiconductor devices that possess the compute power necessary to facilitate AI inference. Sander Verbrugge Nato Innovation Fund Share