As Interest in Defense Tech Grows, Lithuania’s Capital Aims to Take Regional Lead
With global interest in defense technologies rising, the capital of Lithuania fosters a supportive environment for defense tech startups. Vilnius’ startups, recognized in NATO innovation challenges, are developing cutting-edge solutions such as drones and laser technology. Strong governmental backing creates a thriving ecosystem for the 80 defense tech companies in operation.
Lithuanian Minister of Economy and Innovation Aušrinė Armonaitė
Europe has introduced its first-ever Defence Industrial Strategy to ensure defense industrial readiness within the European Union. One of the key targets is to allocate 40 % of the defense budget to products manufactured in Europe by 2030. Lithuanian Minister of Economy and Innovation Aušrinė Armonaitė highlights the importance of strengthening tech ecosystems where these defense products can be developed and manufactured.
“Lithuania provides a collaborative ecosystem and agile innovation hub for defense technology, supported by strong governmental partnerships. Moreover, we are increasing investment in research and experimental development and advancing technology infrastructure.”
The startup ecosystem in Lithuania is among the fastest-growing in Central and Eastern Europe. Between 2018 and 2023, the total value of startups increased 7.1 times. Alongside a manufacturing sector contributing 20% of the GDP, this creates fertile ground for the defense sector to thrive. The capital city, Vilnius, serves as the main tech hub with expertise in critical areas such as cybersecurity and laser technology.
New regulations to support the defense sector
Lithuania has demonstrated how a small country can implement reforms to promote defense initiatives. Defense companies can now establish themselves in free economic zones, and the green corridor for large investments helps attract big defense industry players. Companies can also receive a special status that reduces red tape from two years to six months, including obtaining building permits. Additionally, new financial instruments are already on the horizon.
The latest addition to Lithuania’s defense sector is Rheinmetall, a German military industry giant. With an investment exceeding €180 million, this marks the largest investment in Lithuania’s defense industry to date.
Moreover, the Ministry of Economy and Innovation has introduced the venture capital instrument MILInvest. This initiative promotes experimental development and innovation in Lithuania’s defense and security sector by investing in promising small and medium-sized companies.
“The defense technology industry is young, but expanding rapidly. Currently, 80 companies, including many innovative startups, are based here. Lithuanian-made technologies, such as drones, play a vital role in supporting Ukrainian soldiers,” says A. Armonaitė.
With technologies such as artificial intelligence, autonomous systems, and other deep tech solutions transforming the world and the way NATO operates, Lithuania’s industry aims to contribute to the European defense capabilities. “Lithuania may not rival market leaders like France or Germany, but it certainly has the potential to become an innovation hub in specific defense technology areas, such as laser technologies, where it has significant and globally acclaimed expertise,” Armonaitė states.
Vilnius: tech hub for cybersecurity and laser technologies
The global startup ecosystem index by StartupBlink has highlighted the Lithuanian capital as the top city in the European Union for the cybersecurity industry. Vilnius is home to prominent global players such as Nord Security, NRD Cyber Security, and Surfshark amongst others. To further bolster its position as a leader in the field, Startup Lithuania will launched a cybersecurity acceleration program on September 12 of this year.
NATO plays an active role in nurturing Lithuania’s growing defense tech ecosystem through initiatives such as the Defence Innovation Accelerator for the North Atlantic (DIANA), an industry competition for startups. In 2023, 44 companies where selected as a winners of the first call NATO DIANA challenge, including the two startup from Lithuania Astrolight and Vistareader, which are developing space-to-ground laser communication solutions and secure information sharing solutions.
Additionally, Vilnius-based BROSWARM, which specializes in remote detection and neutralization technologies for mines, won the NATO Innovation Challenge with a drone platform that utilizes data from various sensors processed by artificial intelligence. BROSWARM has previously raised funds from Scalewolf, the first dual-use venture capital fund and accelerator in Lithuania.
“Vilnius is compact, has a tight-knit startup ecosystem, and solutions-focused entrepreneurs. This is a winning formula when we need to react quickly, regroup, and find new approaches to the constantly changing environment. It is imperative that Lithuania remains at the forefront of defense technology to ensure its national security and maintain a strategic edge,” says Armonaitė.