EU presents new EUR115m defence funding tool for SMEs

The European Commission (EC) is presenting a EUR115 million funding tool to fast-track the delivery of new defence technologies developed by SMEs.  

Announced by the EC on 25 March, the pilot instrument – ‘AGILE’ – is designed to provide SMEs, startups and scale-ups with funding to both develop new products and facilitate their path to market. 

The aim is also for AGILE to reduce time-to-grant to four months for companies, while bringing new systems to defence forces in one to three years.  

New technologies on the market  

According to the EC, the Ukraine conflict has demonstrated the need for shortened innovation cycles in defence.   

Efforts to minimise roadblocks include the EU Defence Innovation Scheme, enabled through the European Defence Fund, which promotes a more accessible defence landscape for smaller companies.  

Likewise, the Hub for EU Defence Innovation (HEDI) strengthens cooperation between governments and industry.  

Initially introduced in the EU’s Defence Industry Transformation Roadmap in November, AGILE is now formally being presented to the EU as a pilot instrument to test “ways of engaging with new defence entrants”, and to inform its Multiannual Financial Framework.  

Highlighting the 230 defence tech start-ups founded in Europe since the start of the Ukraine conflict, the roadmap emphasises that SMEs are forming a “a new operating model” of defence development based on agility.  

Andrius Kubilius, European Commissioner for Defence and Space, added how smaller players are bringing a new value to the defence industry.    

“They can bring innovation, flexibility, and cost-efficient solutions, along with new operational ideas,” he said.  

“It is therefore key that we rapidly test, validate, and integrate these technologies into our defence capabilities, ensuring that Europe's defence industry can keep pace with the rapidly changing nature of modern warfare.” 

How it works 

Overall, AGILE will support 20 to 30 projects, providing funding to SMEs on up to 100% of eligible costs. 

Retroactive funding will also be available, where the participating companies can claim expenses from up to three months prior to the closing date of the application. 

According to the EC, the initiative will ensure defence development is “not just innovative, but ready to respond to any threat at a moment's notice.” 

The commission will now present a proposal for the European Parliament and Council to adopt AGILE, with the expectation that it will be operational in early 2027.