European defense startups can raise equity from US investors through conventional private funding rounds, then use European or NATO programmes to complement that capital. For a large, primarily defense-focused round, the EIC STEP Scale Up Defence call is a potential co-investment route; for dual-use companies, the regular STEP Scale Up call may fit better. EIF-backed venture funds and NATO DIANA offer different kinds of support. None of these routes makes US participation automatically eligible or removes the need to assess investment screening and export-control obligations.
Which funding route fits your company?
These routes are not interchangeable: some provide equity directly, some invest through venture funds, and one offers contractual programme funding and support rather than an equity round.
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| Route | What it provides | Best fit | Key consideration |
|---|---|---|---|
| US private investor | Equity in a private funding round; amount and terms depend on the deal. | A company with a credible growth plan and a match with the investor’s interests. | Assess investor fit, governance terms, national investment screening and export controls. |
| EIC STEP Scale Up Defence | €10–30 million in direct equity within an overall round typically sized at €50–150 million or more, according to the European Innovation Council’s 2026 call information. | Primarily defense companies in eligible jurisdictions pursuing a major round. | One qualified investor must precommit at least 20% of the total round; qualification is assessed, not automatic. |
| Regular EIC STEP Scale Up | Support for strategic civilian and dual-use technology under the applicable programme rules. | A company with a credible market case in both civilian and defense markets. | A dual-use label alone is insufficient; check the active call for instrument, eligibility and deadlines. |
| EIF-backed venture fund | Venture investment made by a participating fund, not a direct startup award from the EIF. | A startup that fits a supported manager’s stage, geography and investment thesis. | Fund mandates and portfolio fit vary. |
| NATO DIANA | Contractual programme funding, accelerator support, test access and connections to investors and military end users. | An innovator whose solution fits a published DIANA challenge. | Selection is competitive; the programme describes its funding as contractual, not as an equity round. |
How US private investment can anchor a European round
A US venture fund or other private investor can participate in a conventional equity round. The practical case for investment still rests on the company: a technically credible product, defensible intellectual property, a defined market, evidence of end-user demand and a plausible route to procurement and growth.
Those fundamentals matter especially if the company intends to use the EIC’s defense-focused route. The EIC asks applicants to demonstrate credible traction with defense users and a realistic route to adoption and scale-up in the European defense ecosystem. A prospective lead or anchor investor should be able to evaluate the technology and market, and the company should be ready to explain how the product can reach customers.
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When EIC STEP Scale Up Defence may fit
The call opened on 1 July 2026. Companies established in an EU Member State, Ukraine or an EEA country associated with Horizon Europe can apply. The proposed product, technology or service must be primarily for defense and align with the call’s priority areas.
The EIC’s FAQ defines a qualified investor by demonstrable experience in the relevant market, technology and jurisdiction, together with KYC/AML screening. It says a high-risk investor may exceptionally qualify if there is justification. A US investor may therefore be considered, but founders should confirm qualification with the EIC and their counsel before relying on that investor’s commitment to meet the threshold.
The EIC’s example of a company raising €100 million and obtaining a €20 million investor commitment before applying is illustrative, not a promise that the EIC will invest. The company still needs to satisfy the call’s eligibility and assessment requirements, and complete the round with other capital as necessary.
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The EIC distinguishes its regular STEP Scale Up call from the defense call. Primarily civilian technologies, and dual-use technologies with a substantiated civilian market, should consider the regular route. A dual-use company needs a credible business case for demand in both civilian and defense markets; the EIC says these proposals are assessed under the same criteria as other eligible innovations, not given preferential treatment because they are dual-use.
In June 2026, the EIC announced support for dual-use technologies through the EIC Accelerator and STEP Scale Up, including grants up to €2.5 million and equity investments up to €30 million under the relevant programme rules. These are programme-level limits, not a guarantee of an award to a particular company. Confirm the active call’s instrument, eligibility and deadlines before building a financing plan around them.
How EIF-backed funds can add another investor path
The European Investment Fund’s Defence Equity Facility works through venture funds: the EIF commits resources to fund managers, which then make investments in companies. It is not a direct application for a startup grant or a promise that any particular company will receive capital.
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The facility launched in January 2024 with €175 million in resources and a funding period running through 2027. The EIF said it expected the facility to mobilise up to €500 million, and reported €161 million committed in its June 2026 update. One disclosed example is Join Capital Fund III: in March 2026, the EIF announced a €50 million commitment to the fund, which was targeting €235 million and investing in early-stage European deep-tech and dual-use startups.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallFor a founder, the useful next step is to identify disclosed managers supported by the facility and compare their stated stage, geography and technology focus with the company. The EIF commitment is at fund level; each manager makes its own investment decisions.
What NATO DIANA adds—and what it does not
NATO’s Defence Innovation Accelerator for the North Atlantic (DIANA) selects innovators through public challenges. Its programme page describes contractual funding for selected innovators, tailored accelerator support, access to defense and dual-use investors and military end users, and the opportunity to use more than 200 test centres across the Alliance. This can help a company validate a solution and build relevant relationships if it fits a challenge.
DIANA’s programme page does not describe this support as an equity financing round. Treat it as a potential source of contractual programme funding, validation and network access—not as a substitute for raising a venture round.
How to prepare a cross-border round
- Classify the product accurately. Decide whether the company is primarily defense, genuinely dual-use with civilian demand, or primarily civilian. Use that distinction to identify the relevant EIC route rather than relying on a dual-use label.
- Build evidence of demand. Document user interest, the route to adoption and the commercial case. For a defense-focused STEP application, be prepared to show credible defense-user traction and a European scale-up path.
- Check the investor commitment early. If applying to STEP Defence, verify that the proposed investor meets the EIC’s qualification requirements before treating its commitment as eligible for the precommitment threshold.
- Map fund managers and programmes. Check whether EIF-backed funds fit the company’s investment profile, and whether a published DIANA challenge matches its technology and would provide useful test or end-user access.
- Review the transaction with specialist counsel. Before settling governance, access or control rights, assess investment screening and export-control obligations for the company’s jurisdiction, investor ownership and deal terms.
Foreign-investment screening and export controls
The EU has a framework under which member states can screen foreign investment on security or public-order grounds. National authorities operate and apply their own mechanisms, so whether a particular transaction must be notified or will be approved depends on the company, activity, investor and deal.
The revised EU Foreign Investment Screening Regulation (EU) 2026/1386 entered into force in July 2026 and is scheduled to apply from 17 January 2028. It introduces a common minimum scope that includes relevant defense and dual-use activity and gives greater attention to indirect foreign control. It does not eliminate the need to check the national rules currently in force for the company’s jurisdiction and transaction.
Export-control obligations apply independently of the funding source, and the company remains responsible for compliance, according to the EIC FAQ. Do not assume a holding-company arrangement or a particular investor structure will avoid screening; the result depends on transaction-specific facts and applicable national law.
The available programme and policy information establishes funding routes and a general screening framework, not which US investor is best for a startup, what valuation or terms it can obtain, or whether a specific transaction needs notification or will be approved. Those questions require company-specific diligence and legal advice.
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