MILInvest 2 and Lithuania’s EUR 40M Push for Defence Innovation: Exclusive Insights from ILTE National Development Bank

• MILInvest 2 is a new EUR 40M venture capital fund supporting Lithuania’s defence and security startups
• Managed by ILTE, it provides pre-acceleration, acceleration, and investment through intermediary funds
• The fund focuses on SMEs developing innovative defence technologies and solutions.
• The initiatives aims to strengthen the country’s resilience, NATO integration, and international defence sector collaboration

This July, the Lithuanian Ministry of Economy and Innovation and Ministry of National Defense announced the creation of MILInvest 2, their new EUR 40M venture capital instrument for defense companies. The ministries contribute EUR 30M and EUR 10M respectively. The initiative will be managed by UAB ILTE, Lithuania’s national development bank, and realized through two intermediary funds which are yet to be selected. These funds will be required to attract additional private funding to their investments.

ILTE and the MILInvest Initiative in a Nutshell

ILTE (Inovacijų ir Lūkesčių Technologijų Ekosistema / Innovation and Expectations Technology Ecosystem) is a Lithuanian state-owned company under the Ministry of Economy and Innovation. It manages and implements financial instruments, such as MILInvest, to support startups and SMEs developing defence, dual-use, and deep-tech innovations. Its role is to strengthen Lithuania’s innovation ecosystem by connecting businesses with funding, partners, and international markets.

MILInvest 1 was Lithuania’s first defence-focused venture capital instrument, launched in 2021 with around EUR 13.5M to support startups and SMEs developing security and defence technologies. It provided equity investments through selected financial intermediaries, helping early-stage companies grow and commercialize dual-use innovations. The fund backed firms like Granta Autonomy and Broswarm, while strengthening ties to NATO and international markets.

New Venture Fund to Accelerate Lithuania’s Defense Innovation Ecosystem

MILInvest 2 is the new EUR 40M venture capital instrument designed to foster experimental development and innovation in Lithuania’s defence and security sector, with a focus on micro, small, and medium-sized enterprises. Managed by UAB ILTE, it will support idea development, team building, and competency strengthening through pre-acceleration and acceleration programs. Two financial intermediaries will be selected to manage the fund and investments and announced in Q4 2025.

ILTE’s CBDO Inga Beiliūnienė calls this a consistent step by the ministries in strengthening Lithuania’s defense capability through technological development.

‘ILTE already has vast experience in implementing measures of this kind, including the first MilInvest and a EUR 250M loan program to finance defense company projects, so this new initiative is based on a previously tested model that allows for the effective creation of innovative solutions and strengthening cooperation between science and business in the defense sector,’ Ms Beiliūnienė notes.

ITKeyMedia approached ILTE’s CEO Dainius Vilčinskas to find out more about the MILInvest 2 instrument.

Does MILInvest 2 differ strategically from the first MILInvest program in terms of targeted sectors, investment stages, or long‑term goals?

Dainius Vilčinskas: Milinvest 2 is closely aligned with Milinvest 1, serving as a continuation of the same vision and purpose: to finance and foster the development of defence and security innovations, while building a sustainable ecosystem. It will offer both pre-acceleration and acceleration programs, through which fund managers will support the development of product concepts and invest in established companies that are already producing tangible solutions.

What lessons were learned from the first MILInvest, including successes with companies like Granta Autonomy or Broswarm? How will these lessons be institutionalised into MILInvest 2?

DV: From the first Milinvest program, several key insights emerged: successful products and solutions often come from development teams with military experience and an engineering mindset. These teams have practical knowledge of what is lacking, what is relevant on the battlefield, and can often spot the potential of specific innovations earlier than others. ScaleWolf fund, entrusted with managing Milinvest 1, noted that Lithuania offers favourable conditions for prototype testing—our environment is flexible and fast, aided in part by our close ties with Ukraine. Products sent to the Ukrainian military for testing received rapid feedback on what worked and what needed improvement, providing invaluable experience for defence companies.

Is it correct to understand that a mix of public and private funding is envisioned in MILInvest 2? How will ILTE attract and retain private co‑investors? 

DV: ILTE plans to select two financial intermediaries—funds with relevant experience—to manage the instrument. ILTE does not itself decide which teams or companies to invest in; instead, it engages investment managers with experience in the defence sector. The newly selected partners will also be required to attract private capital. In the case of Milinvest 1, ILTE allocated EUR 11M, while the fund managers raised an additional EUR 6M in private funds.

What criteria and evaluation process will ILTE use when selecting the two financial intermediaries to run the pre‑acceleration, acceleration, and investment stages?

DV: The criteria for the selection process are still being finalized, but the main factors will, of course, include the potential fund managers’ experience in managing venture capital funds and investing in companies, including experience in the defence and security sector. Considerable attention will also be given to assessing the funds’ investment strategies.

How does ILTE reach teams? Are there specific outreach or collaboration strategies?

DV: ILTE works with nearly all private equity and venture capital funds in Lithuania, so its partnership network is quite close—we know the funds well and meet with them at joint events. The selection process is always public, with the conditions and call for applications posted on the ILTE website and other public channels, allowing all eligible parties to apply, including new management teams.

Which key performance indicators (e.g. number of teams supported, funding amounts per stage, commercial success metrics) will ILTE use to evaluate the effectiveness of MILInvest 2’s investments?

DV: Main KPIs will be set for the fund managers, including the number of participants in the pre-acceleration and acceleration programs, as well as the number of investments made in companies.

Particularly, how does ILTE ensure that supported startups are integrated into NATO innovation pipelines or international defence markets?

DV: This is generally the responsibility of the fund managers, our partners. However, they are all naturally motivated to address the expectations and needs of NATO countries and are well acquainted with the areas NATO tends to develop, as well as the sectors in which the NATO Innovation Fund invests. This knowledge can influence the number of future contracts and the overall success in the international market.

Given the sensitivity of defence technologies, how do vetting and intellectual property safeguards get addressed the MILInvest 2 processes?

DV: This is also the responsibility of the fund managers; they have their own procedures and processes to ensure and safeguard all rights of products and solutions.

Overall, how do you envision MILInvest 2’s role in the country’s and region’s military resilience?

DV: Milinvest 2 is not the only instrument for developing defence innovations in Lithuania, but given that several times more funding—€40 million in total—is allocated to Milinvest 2 than was available for Milinvest 1, our goal is to foster the creation of new, effective defence and security solutions in Lithuania. These solutions should help achieve an advantage on the battlefield or in deterrence strategies. This is a strategic necessity for our country and the entire Baltic region, while successful products also help strengthen international partnerships with NATO member states.

Summarizing in the words of the Lithuanian Minister of Economy and Innovation Lukas Savickas ‘Investment in defence technologies is not only a financial need, but also a strategic necessity. Attracting capital will help defence sector startups grow, strengthen our technological progress and independence, and cooperation with international partners.’

The MILInvest 2 initiative represents Lithuania’s crucial step toward strengthening its defence and security innovation ecosystem, expanding significantly on the foundation set by MILInvest 1. With EUR 40M in capital, it empowers startups and SMEs with resources, acceleration programs, and market access to develop cutting-edge solutions. By fostering collaboration between business, science, and international partners, the initiative is poised to boost Lithuania’s resilience, technological independence, and further integration into NATO defence networks.