NATO Innovation Fund
NATO's €1bn multi-sovereign venture fund; backed Oxford chip startup Fractile's $220m Series B.
NATO Innovation Fund took a stake in Oxford chip startup Fractile's $220m Series B on 20 May 2026 alongside the CIA's In-Q-Tel, with no UK sovereign vehicle on the cap table, then backed Berlin drone maker Stark Defence's €500m round on 23 June.
Last refreshed: 31 July 2026 · Appears in 2 active topics
What does NATO's investment in a British chip startup mean for UK sovereignty over AI hardware?
Timeline for NATO Innovation Fund
Invested in Greenjets' Series A alongside NSSIF
UK Startups and Innovation: Greenjets raises £30m in its 21st yearMentioned in: CuspAI closes at $2.6bn, EU fund circles
UK Startups and InnovationJoined roughly fifty other investors in Stark Defence's round.
Drones: Industry & Defence: Stark closes €500m above its own askInvested in Fractile Series B alongside In-Q-Tel
UK Startups and Innovation: Fractile lands NATO and CIA chip cashBackground
The NATO Innovation Fund is a €1bn multi-sovereign venture capital fund established in 2022 by 24 NATO member states, the first multi-government venture fund in NATO's history. It invests in dual-use technology startups across deep tech, energy, space and advanced manufacturing, with a mandate to accelerate technologies relevant to allied defence and security.
The fund operates commercially, seeking market-rate returns alongside its strategic mandate, which distinguishes it from grant-based defence innovation programmes. Portfolio companies gain no automatic NATO procurement rights, but the fund's participation in a round signals allied-government interest in a technology's direction, giving it an influence disproportionate to the size of any single cheque.
NATO fund beat the UK into Fractile
NATO Innovation Fund took a position in Fractile's $220m Series B, closed 20 May 2026 at roughly $1bn, alongside the CIA's In-Q-Tel and lead investors Accel, Factorial Funds and Founders Fund; neither the UK's Sovereign AI Unit nor the British Business Bank appeared on the cap table . The stake came three weeks after a UK minister had named Fractile in a chip-policy speech.
The fund followed with a £30m stake in Bedford electric-aircraft-engine maker Greenjets on 21 July, alongside the UK's own defence-tech investment Arm, extending its dual-use pattern from chips into propulsion . Both deals show allied national-security capital arriving in British deep-tech rounds ahead of, or alongside, domestic state vehicles.
NATO fund bets on drone manufacturing scale
NATO Innovation Fund joined Stark Defence's €500m round, closed 23 June 2026 above the company's own ask at a valuation above €3.5bn, alongside Sequoia Capital and Peter Thiel's Founders Fund . More than 80% of the new capital is earmarked for drone factories in Germany, Britain and Ukraine.
Stark has yet to prove it can build at the volumes the money assumes, so the fund's participation is a bet on manufacturing execution rather than technology risk, a different profile from its earlier Fractile stake in unproven chip architecture.