What is the NATO Innovation Fund?

Posted on 04/01/2023

Formed in 1949, the North Atlantic Treaty Organization (NATO), also called the North Atlantic Alliance, is an intergovernmental military alliance between 30 member states – 28 European and two North American countries. Established in the aftermath of World War II, the organization implemented the North Atlantic Treaty, signed in Washington, D.C., on April 4, 1949. NATO is a collective security system: its independent member states agree to defend each other against attacks by third parties. During the Cold War, NATO operated as a check on the perceived threat posed by the Soviet Union (USSR).

On June 30, 2022, NATO Secretary General Jens Stoltenberg presided over the creation of the NATO Innovation Fund. NATO Innovation Fund will invest 1 billion euros in early-stage start-ups and other venture capital funds developing dual-use emerging technologies of priority to NATO. These include: artificial intelligence; big-data processing; quantum-enabled technologies; autonomy; biotechnology and human enhancement; novel materials; energy; propulsion and space.

NATO Innovation Fund will complement NATO’s Defence Innovation Accelerator for the North Atlantic – or DIANA – which will support the development and adaptation of dual-use emerging technologies to critical security and defence challenges. There has also been significant progress for DIANA at the 2022 Madrid Summit where Allies agreed that innovators participating in DIANA’s programs will have access to a network of more than 9 business accelerator sites and more than 63 test centers across Europe and North America. NATO Innovation Fund will invest €1 billion in early-stage start-ups developing emerging and disruptive technologies and other venture capital funds developing dual-use emerging and disruptive technologies (deep tech). The 22 countries in NATO at the 2022 Madrid Summit formed the NATO Innovation Fund, the world’s first multi-sovereign venture capital fund.

Participating NATO Allies have recently appointed, by consensus, the first three members of the NATO Innovation Fund Board of Directors: its Chairman, Dr. Klaus Hommels, founder and chairman of venture capital firm Lakestar; as well as Dame Fiona Murray, Associate Dean of Innovation and Inclusion at the Massachusetts Institute of Technology (MIT) School of Management; and Dr. Roberto Cingolani, former Italian Minister for Ecological Transition and founder of the Italian Institute of Technology. The Board of Directors will ultimately total nine members. This Board of Directors will be support and advise the fund’s senior management team, which will be formed in the coming weeks. Global search firms True Search and Egon Zehnder are supporting efforts to identify the leadership for the senior management team and the Board of Directors respectively.

The Netherlands will host the headquarters for the NATO Innovation Fund’s investment management arm. Given the wide geographic remit of the NATO Innovation Fund, further regional offices will be set up across the Alliance.

The NATO Innovation Fund itself is a financial partnership between participating NATO Allies as limited partners and an investment management arm purpose-built specifically for NATO Innovation Fund. Participating Allies have previously agreed to domicile the partnership in Luxembourg.

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