EU launches new defence funding pathways for SMEs

The EU’s European Innovation Council (EIC) has expanded its scope to offer dual-use and defence funding pathways to SMEs and startups for the first time in a “strategic pivot” to help fill capability gaps in Europe.  

An announcement on 17 June from the EIC – an initiative to scale up breakthrough technologies under the Horizon Europe funding mechanism – says that a range of defence-related grants and equity investments will be provided to smaller companies.  

While the EIC has historically focused exclusively on civilian innovation, this expansion not only shifts its remit into defence, but also marks the first time that any EU funding programme will invest direct equity into defence companies. 

The new funding pathways were established via an amendment to the EIC Work Programme 2026 adopted by the European Commission. This is part of the implementation of the 'mini-omnibus' legislative package – introduced in 2025 – to enable EU investment in defence and dual-use projects.  

It feeds into the broader Defence Readiness Omnibus, designed to facilitate EUR800 billion in defence investments from EU member states and private capital by 2030 while also removing procurement bottlenecks. 

Investment into defence  

Two of the funding pathways announced include the EIC Accelerator and Strategic Technologies for Europe Platform (STEP) scale up schemes. Under these pathways, dual-use SMEs and startups may apply for grants of up to EUR2.5 million and equity investments of up to EUR30 million. Coaching, mentoring, and networking opportunities are also available. 

The EIC Accelerator and STEP funding are specifically targeted towards businesses developing technologies such as advanced materials, AI and robotics at technology readiness level (TRL) six or above. 

Companies in EU member states and Horizon Europe-associated countries are able to apply for the Accelerator and STEP funding.

The EIC has additionally launched a EUR100 million STEP Scale Up Defence Call. This is offering up to EUR30 million in direct co-investment equity to defence SMEs and startups, to bolster their industrial capabilities.  

This funding is designed for companies developing defence technologies at TRL six or above, in areas pertaining to air and missile defence, drones and counter-drones, ground combat systems, and more. It is intended for businesses seeking to secure larger private investments, typically ranging from EUR50-150 million and above.  

The scale up call is open to companies in EU member states, in the European Economic Area associated with Horizon Europe, and in Ukraine. The call for submissions will be open from 30 June to 28 October, with evaluation results expected in early 2027.  

An information session regarding all the funding opportunities will be held on 24 June.