Last year the Seimas of the Republic of Lithuania approved the amendment to the Law on the Organisations of the National Defence System and Military Service which gave a new function to the Ministry of National Defence – funding development and innovation in security and defence. As a result, the Defence Investment Fund was established with a mission to assist start-ups and companies in developing new products and entering the international defence industry market.
“Equipment manufactured in Lithuania today is already noticed internationally, and we expect the Fund to facilitate the development of the Lithuanian defence industry and its integration in international market even more,” Vice Minister of National Defence Vilius Semeška says.
Vice Minister also underscores that principles of transparency and publicity will be respected win the fund manager selection procedure. The selected managers will be evaluated and approved at the Defence Supervisory Committee of the Fund.
The Ministry of National Defence signed the contract with “Investicijų ir Verslo Garantijos” UAB (INVEGA) (https://invega.lt) on the establishment of the Fund in the end of last year. The company opened the venture capital fund manager selection procedure on May 19 to find an investment professional to become the fund manager of the venture capital financial instrument MILInvest.
“The MILInvest venture capital financial instrument will receive money earmarked by the Government of Lithuania under the DNA of the Future Economy Plan. 13.5 million euros of public funds will be given to the approved financial instrument for a 10-year period. The Ministry of National Defence will be the appropriation manager, define the eligibility for funding requirements, will be represented in the Fund Supervisory Committee.
Establishment of the Defence Investment Fund is expected to facilitate the development of Lithuania’s defence industry. Lithuania currently has only a few sizeable companies with a clear defence production specialisation. Other companies are either dual specialisation or only capable of producing for the Lithuanian Armed Forces or larger international companies if needed.
So far, more attention concerning promotion of defence innovation was paid to solitary projects that met the requirement in the Lithuanian Armed Forces, however, the projects would only result in prototypes and fall short on financing for further development and commercialisation. The new fund will take it to the other side of the limit and allow such projects to progress from prototype building to production of new products and entrance into the international market.
It is beneficial to strengthen the national defence industry for several reasons. One of them is a shorter supply chain: the country needs a secure provision of defence products and services carried out independently or guaranteed by third parties in case of a crisis. Another reason is cultivation of competences of the Lithuanian Armed Forces through product testing and cooperation with developers. Then, increased exports and creation of new jobs. Production of high added value products and collation or cooperation of relative branches of the industry, scientific institutions, etc.
