Deutsche Telekom AG and Porsche Automobil Holding SE are in advanced discussions to establish a €500 million venture capital fund focused on European defence technology companies. This initiative comes at a critical juncture, as Europe experiences a surge in military spending driven by geopolitical tensions and a renewed emphasis on security.
The proposed fund, managed by DTCP—a Hamburg-based investment firm spun off from Deutsche Telekom a decade ago—will capitalise on the growing demand for advanced defence technologies. While the final structure and size of the fund remain subject to change, sources close to the matter confirm that both companies are committed to seizing opportunities in Europe’s expanding defence sector.
Porsche SE’s Strategic Pivot
Porsche SE, the holding company overseeing the Porsche and Volkswagen automotive empires, has confirmed its intention to establish a dedicated fund for defence-industry investments. This marks a significant departure from the company’s previous policy, which restricted investments to firms developing dual-use technologies with both civilian and military applications. The shift underscores Porsche SE’s strategic intent to engage with Europe’s burgeoning defence market.
Europe’s Defence Spending Boom
The fund’s launch aligns with a broader trend of increased defence spending across Europe, fuelled by Russia’s ongoing war in Ukraine and growing concerns over the United States’ commitment to NATO. European governments have allocated hundreds of billions of euros to rearmament, prompting investment firms to explore a sector long considered off-limits due to ethical and regulatory concerns.
Several investment firms, including Lakestar, Tikehau Capital, and CVC Capital Partners, are now actively raising funds and assembling specialised teams to pursue defence-related deals. In June, Orange Business launched a dedicated division focused on defence, further signalling the sector’s growing appeal.
Regulatory Shifts and New Opportunities
For years, European defence startups relied heavily on US funding due to restrictions on weapon-related investments. However, this dynamic is evolving. Public financiers such as the European Investment Fund and Germany’s KfW have recently relaxed their policies, facilitating greater capital flow into the sector. This regulatory easing is opening new avenues for domestic and regional investors.
Building on Existing Partnerships
The new defence-focused fund builds on Deutsche Telekom’s and Porsche SE’s existing collaboration. In 2023, Porsche SE invested in a DTCP growth equity fund, and the two entities, alongside Deutsche Telekom, launched Incharge Capital Partners, a venture capital fund dedicated to connected mobility.
Their joint track record includes investments in Quantum Systems, a German drone manufacturer developing both civilian and military applications. Quantum Systems raised funding in May at a valuation exceeding $1 billion, with Porsche SE and DTCP as key stakeholders and Deutsche Telekom as an anchor investor in DTCP.
A New Era for European Defence Investment
The move by Deutsche Telekom and Porsche SE positions them among a growing list of European investors tapping into the defence market. Once sidelined by private investors, the sector is gaining legitimacy as security priorities reshape economic strategies across the continent. The participation of high-profile backers, combined with the scale of the planned €500 million fund, signals that the European defence investment landscape is entering a new growth phase.
With DTCP at the helm, leveraging its experience and established network, the new fund could play a pivotal role in channelling capital into innovative European defence technology companies. While final details remain subject to change, the initiative reflects a broader shift in European investment strategies—one that moves away from traditional reservations and toward actively engaging with the continent’s security and defence imperatives.
