Darkstar VC Fund Backs Ukraine-Rooted Defense Tech Without Civilian Requirement

In a move that marks a shift from the cautious stance of most European venture capital firms, Estonian fund Darkstar has begun investing directly in defense technologies emerging from Ukraine’s war zones—without requiring civilian applications. Co-founded by entrepreneur Ragnar Sass, the fund aims to support battlefield-proven innovations with direct military utility, bypassing the dual-use constraint still upheld by many public and private investors, including the NATO Innovation Fund. With a fundraising target of €25 million, Darkstar has already closed €15 million and made initial investments in two Ukrainian-Estonian startups: Farsight Vision and Deftak.

The fund's mission is underpinned by a pragmatic view of the war in Ukraine as a proving ground for rapid defense innovation. Sass, who previously co-founded the CRM platform Pipedrive, has spent the last three years developing relationships with Ukrainian brigade commanders and tech teams. His decision to focus on weapons systems was informed by field experience and shaped by his belief that frontline units operate with the speed and adaptability of early-stage startups. Darkstar not only supplies capital but also helps these teams set up compliant structures within NATO jurisdictions to facilitate procurement and grant eligibility.

Darkstar distinguishes itself from more traditional funds through its operational model, which includes hackathons and bootcamps that expose startups to real-world military needs. The next session is scheduled for Kyiv this summer and will offer field-testing and direct feedback from Ukrainian units. The fund’s investment thesis focuses on areas such as autonomous systems, air defense, electromagnetic warfare, and battlefield communications. Its geographic scope extends beyond Ukraine, with conversations underway with teams based in Central and Eastern Europe, the U.K., and Germany. Still, Sass maintains a hard line: companies must be prepared to relocate operations outside Ukraine to attract capital.

State-backed LPs have also shown interest. Estonia’s SmartCap and Lithuania’s Coinvest Capital are among the few sovereign entities in Europe to support pure defense plays without requiring a dual-use angle. This is notable given that most government-affiliated funds avoid non-civilian technologies, often for regulatory or reputational reasons. Darkstar’s approach suggests a new venture capital template rooted in national urgency and operational relevance, where field validation matters more than scalability across commercial verticals. Sass argues that governments and private capital must close the gap between procurement timelines and combat realities.

In a landscape where prime contractors often struggle to meet NATO’s speed requirements, Sass sees startups as the new critical path for defense innovation. Some may be acquired by legacy firms; others could grow independently. Although the long-term exit potential of pure defense startups remains uncertain, the success of firms like Anduril and Helsing signals that venture-scale returns are increasingly feasible. Sass maintains that beyond returns, the urgency is real: Russia’s military-industrial base is expanding, and Europe’s response must include coordinated technological acceleration. Darkstar represents a Baltic-led response to this imperative, building a portfolio of startups ready to scale military impact, not just valuations.

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European VC breaks taboo by investing in pure defense tech from Ukraine’s war zones