Dear Investors and Friends of D3,
We began writing this update on the train back to Kyiv from the Munich Security Conference—two places that could not feel more different. One might assume we were leaving the stronghold of a powerful democratic alliance for a somber war zone. But the reality is quite the opposite.
While our time in Munich was productive, we feel we are reliving Munich 1938. We are not waiting for a “European Roosevelt” to respond to our “Churchill’s telegram.” Instead, we returned home to an oversubscribed Defense Tech Innovation Summit, where over 2,000 attendees and 150+ investors from around the world gathered in Kyiv—the capital of freedom—for two days of dynamic exchanges on innovation that is actively defeating our enemy.
Total = 563 (+26)
We have extended an investment offer to Cambridge Aerospace, a UK-based company developing advanced drone interceptor systems designed to counter heavy, high-speed drones and light missiles. We are thrilled to collaborate with founders Steven Barrett, the Regius Professor of Engineering at Cambridge University and former Head of Aerospace at MIT, and Grant Shapps, former UK Secretary of State for Defense. The company will initially focus on a rapid-response counter-Shahed drone solution before advancing to more sophisticated interceptor systems capable of neutralizing higher-category drones and even missiles.
Cambridge Aerospace Investment Case:
Cambridge Aerospace - Investment Case.pdf
We continue to encounter predatory deal terms, especially when major U.S. VC firms are involved. Cambridge Aerospace is no exception. The lead investor, Lux Capital, had to carve out an allocation for us. It has become increasingly common for defense tech startups to give up as much as a third of their company in their first funding round—often at valuations exceeding $30M. This is driven by the need for larger rounds to cover prototyping and initial production costs.
The primary reasons for this trend are:
a) A lack of credit lines for working capital and CAPEX.
b) A not always justified investor concern that federal contracts take too long to materialize, pushing companies to secure longer runways.
Meanwhile, we attended the European Defense Tech Hackathon in Munich, where the Technical University of Munich (TUM) is emerging as Europe’s leading defense tech talent hub outside of Ukraine. The caliber of teams in Munich consistently surpasses that of other European hackathons. This influx of top-tier engineering talent into defense tech would have been unthinkable before the war in Ukraine.
We had partnered with the organizers for their launch event in June 2024, and it’s exciting to see their success. They are now expanding to a series of 12 hackathons across Europe this year, all focused on solving challenges generated by the Ukrainian MoD.
Traction