Six years ago, you could count Lithuania’s defense companies on one hand. A couple of semiconductor firms, some service work for state-owned outfits, and little else. Today, the figure runs close to 200. The story of how a country of under three million pulled that off is one of the most exciting case studies in European defense.
The blueprint on how to activate the startup space came from abroad and was applied with unusual discipline. Edvinas Kerza, ScaleWolf’s founder studied how Israel did it, including a private conversation with the Israeli prime minister about how the state backs its innovators. “Venture capital and acceleration activities are exactly those tools,” he concluded, “with governmental support as an LP.”
At Scalewolf, they managed to persuade the government to act as an active limited partner. None of this was obvious at the time. “No one six years ago, literally no one, was investing in defense,” he recalls. Investors were deeply sceptical, and many flatly refused to look at the sector. “Are you serious?” they would ask. “Now it’s very popular. Everyone is doing that.”
What he built operates as a staged funnel. Of 59 companies that came through the programmes and hackathons, around 22 took first cheques of 30,000 to 250,000 euros to prove an MVP, with a second fund following the survivors towards seed rounds of up to 2.5 million. The fund is now raising 100 million euros for later stages.
The model is deliberately hands-on and avoids focusing only on polished presentations: “I don’t want to invest in the presentation that you will bring. I want to see you spending a lot of time with my team and me.” Nor does he care which sub-sector a team is in.
Drones, lasers, radio frequency: it “doesn’t matter.” What matters is whether a team reaches the front line and grows two or three times a year, because “if you’re not combat-proven, no one would like to buy your technology.” The portfolio bears that out. Granta Autonomy’s loitering munition is fully autonomous, jam-resistant, and, he claims, ” costs six times less than a Switchblade,” able to kill a tank at 50 to 60 kilometres for the price of a cheap car.
Pulsetto, whose nerve-stimulation device helps exhausted soldiers recover, grew from 42 million euros in revenue towards a projected 100 million.
The need is real, he argues: combat troops “are overstimulated, they have emotions,” and a device that helps them stay steady and recover saves lives.
The companies themselves are the proof. Brolis Defence is the elder statesman, run by three brothers and in defense since 2011, when, as one co-founder (Kristijonas Vizbaras) puts it, “defense was a toxic topic”, and banks would not lend. “We three brothers, we took our own personal loans,” he says.
Profitable since 2017, the firm now ships more than 3,000 laser aiming devices a month to over 30 countries on a fully European, ITAR-free and China-free supply chain, and sits at the centre of NATO’s infantry modernisation. “We started way before it was cool,” he says. “We have already run that marathon; many startups are only starting to run now.” His designs are tested for the end users: the soldier “doesn’t care what’s inside the box,” so the product has to work like an iPhone. That maturity is now drawing capital of its own. ETNA Capital has agreed to buy 60% of the company, the biggest Lithuanian defense-VC deal of the year.
UDS, founded in 2022 by a team that had already sold a satellite company to Kongsberg, NanoAvionics, builds a full kill chain: the Forecaster surveillance platform, the Avenger 5 loitering munition and a Swarm C2 layer that plugs into existing battle-management systems such as SitaWare, ATAK and Delta.
Its philosophy is blunt about what defense is really protecting: the scarcest resource, Vytenis Buzas, co-founder and CEO of UDS, says, “is people.” It runs an R&D hub and distributes volume production to partners across Lithuania, Latvia and Ukraine, giving it “huge elasticity in our production capacity.” It opened a Ukrainian entity in December, raised one of the country’s largest seed rounds in 2024, and topped it up with a preferential loan from the state development bank. Growth, the Vytenis notes drily, comes at the pace of government: “Welcome to the B2G sector.”
NanoAvionics tells the same story from orbit. With no national space-defense budget at the start, it was “forced by nature” to be commercially competitive worldwide, and now offers the same capability (Earth observation, synthetic-aperture radar, signals intelligence and broadband) as far larger national providers at a fraction of the cost.
It has flown 62 satellites with a 100% first-contact record, well above the industry norm, and is building a serial-production line for a 280-satellite constellation. Acquired by Kongsberg, it has the scale advantage, though it shares the whole sector’s frustration over the launcher’s options shortage: SpaceX is booked through 2029.
The capital has kept the same pace. Coinvest Capital, the state-backed co-investment fund inside the national development bank ILTE, deploys long-term investments into the defense space disregarding of the long cycles that scare off ordinary VCs, then shares the upside.
Its profit-sharing model caps the fund’s own return (8% for a startup, 4% for a university spin-off) and hands the surplus to private co-investors, an arrangement that once turned a 9x exit into 34x for the angels alongside it.
Its manager, Viktorija Trimbel, invests in promising companies “pre-revenue, and sometimes even pre-prototype,” and would, in her words, “rather invest in space than another dog Tinder.”
A pivotal moment came when the state development bank decided defense was an acceptable place for public venture money; the private funds followed within months.
Lithuania is among the fastest-growing startup ecosystems in Central and Eastern Europe, with ecosystem value reaching €16.4 billion in 2025 and growing 5.9 times over five years, nearly four times faster than the CEE average, according to startupmafia. The effects of these changes have been profound as operators from Vinted and Nord Security have become the Angels’ backbone of the ecosystem.
If anything, money has gone from scarce to abundant almost too fast. The same Brolis co-founder who took out personal loans in 2014 now marvels that a founder with an idea can “in two weeks raise 30,000 euros” to validate it, and “it became even maybe a little bit too easy.” The angel base is professionalising too, with a Defense Angels European Network now incorporated to push cross-border investment across the continent.
What ties it together is conviction, and a clear-eyed worry about what could undo it. Kristijonas credits the new spending climate and wants it locked in: “Donald Trump forced Europe to finally start spending on defense. I want this to continue.” Defense, he argues, has to be treated as “part of [Europe’s] survival package.”
On the evidence of the last six years, Lithuania has built something that deserves preserving.