NATO Innovation Fund Updates Investment Team | Defense Investment

NATO Innovation Fund Enters New Phase with Leadership Changes

The NATO Innovation Fund (NIF) is embarking on a new operational period, following the addition of two new partners and the departure of a key member from its original team. This transition occurs two years after the fund initially secured $1 billion in commitments from over 20 nations.

Increased Investment in Dual-Use Technology

Military expenditure among NATO member states has risen significantly, leading to a substantial increase in investment within the realm of dual-use technology. Since its announcement in 2021, defense and resilience technologies have experienced unprecedented growth, representing 10% of all venture capital funding in Europe last year – the location of the majority of NIF’s supporting nations.

Despite this favorable climate, the NIF faced initial hurdles due to managerial issues and personnel turnover. However, following reaffirmation of its importance at the 2025 NATO Summit in The Hague, the fund is now operating with a largely refreshed investment team.

Restructuring of the Partnership

Originally structured with four partners and one managing partner, the NIF now comprises a team of three partners. Sources indicate that this streamlined structure is expected to remain consistent in the near future.

The two new partners are Ulrich Quay and Sander Verbrugge, both based in Amsterdam. Quay, a German national, previously led corporate investments as a Vice President at BMW, and also founded and oversaw BMW i Ventures. Verbrugge, a Dutch PhD in molecular biophysics, joins from deep tech VC firm Innovation Industries, having previously worked at NXP, a semiconductor company.

Completing the partnership is Patrick Schneider-Sikorsky, who remains from the original investment team and is based in London.

Departures and Ongoing Board Responsibilities

Founding team partner Kelly Chen has announced her departure to pursue a new venture. Chris O’Connor, another founding partner, also left NIF earlier in the year with similar intentions.

Chen currently maintains positions on the boards of several NIF-backed startups, but will be transitioning these responsibilities as her tenure with the fund concludes, according to Amalia Kontesi, NIF’s chief communications and marketing officer.

Investment Progress and Future Focus

While some have expressed a desire for quicker capital deployment, Kontesi asserts that NIF “is on track to meet [its] investing goals for the year.” To date, the fund has completed 19 investments, including seven in funds like OTB Ventures and 12 directly into startups, such as Space Forge and Tekever, both specializing in dual-use drone technology.

The NIF’s core objective remains to “empower deep tech founders to address challenges in defence, security, and resilience.” The addition of partners with backgrounds in industry and science is intended to further this mission.

Expanding Role in Defense Technology Adoption

NIF has also increased its involvement in the defense sector, playing a key role in developing NATO’s Rapid Adoption Action Plan. This initiative aims to accelerate the integration of new technologies for defense purposes. Furthermore, the fund is strengthening its Mission Platform Group through strategic hires, including John Ridge as chief adoption officer in 2024, to assist portfolio companies in navigating military procurement processes.

Recruitment Process and Team Dynamics

The selection of new partners followed a process likened to “building a boy band” by VC Michael Jackson. Partners were chosen by NIF’s board of directors and approved by limited partners (LPs), rather than being selected based on pre-existing relationships or compatibility.

Recognizing potential issues from the previous team’s dynamics, the current partners were given opportunities to meet and collaborate throughout the recruitment process to “ensure a smooth transition and to position the team for long-term success,” Kontesi explained.

Looking Ahead: A Startup Approach to Innovation

In a statement provided exclusively to TechCrunch, Professor Fiona Murray, NIF’s vice chair, described the organization as akin to a startup. “We are proud of what we accomplished, but like any effective team we are learning, experimenting, improving: speeding up our processes, expanding our platform support for startups, doubling down on ecosystem building and more broadly recognizing the need to build the sector and the capital stack.”

Collaboration and agility are key priorities for the new team, as Murray emphasized their ability to “move even more rapidly and decisively to drive the Alliance’s technological agenda and support the best founders across European ecosystems.” This sentiment was echoed in a joint statement with NIF’s chair, Klaus Hommels.

While questions have been raised regarding potential conflicts of interest related to Hommels’ other investments, no changes to his role were made during the recent LP meeting in Venice. NIF’s primary focus now is on enhancing NATO’s resilience.

“In this next phase,” Murray stated, “you’ll see us refocus on DSR opportunities and emphasize building companies that can drive industrial scale and really support ecosystems across Europe.”