Hi Eric,

It's been relatively quiet in Kyiv this month. We can't say the same about Russia. As mentioned on our call, Ukraine has been developing long range capabilities at record speed with visible results. A year ago, there were a couple of companies with drones which could reach 400+ km. Today, there are around 20 companies including one with a 1300 km range model. The missions towards oil refineries, air fields, and other strategic assets inside of Russia are carefully planned and conducted by dozens of long range drones from 3-5 producers launched in sequence (mostly from maritime platforms) to guarantee results. SBU, GUR, and Special Forces now work jointly on these operations to maximize information exchange and success. Here is the long range drone landscape we built to keep track of the developments in this area.

Deal Flow

Total = 336 (+12)

We finished the investment memo and extended the formal investment offer to Neros Technologies. See attachment. The founder/CEO visited Kyiv last week for a successful set of trials. We started to work closely with his local biz dev rep. We were even more impressed with the founder and product after this visit.

Neros Technologies founder during trials in Kyiv

Neros Technologies FPV drones (N-1) during testing in Kyiv

Neros Investment Case.pdf

Portfolio news

• Tytan closed their round with terms that ended up being even better than we had previously reported. Magnetic Capital and Lakestar invested $2.2M @$18.6M valuation (post-money), marking an 8.5x increase in valuation over the past 5 months.
• HighCat raised a new round of $1.5M @ $15M cap from ODM, a provider of custom made tech products for the defense sector. That's a 4.2x increase from our round last fall. This solidifies their partnership with ODM for tapping into Budenswehr large contracts.
• Swarmer is progressing fast towards autonomous drone missions. They conducted >10 end-2-end field tests of their AI powered mission control center, Styx.AI, with 3 heavy drones and it works! Check the video here.

We hosted the founder of Auterion, Lorenz Meier, for a fireside chat with our portfolio founders. He shared his inspiring founder story on creating Pixhawk, MAVLink and QGroundControl, today’s most commonly used flight control hardware and autopilot software.

GR and Ecosystem

• We met with General Zaluzhniy to hand him the official invitation to become our Emeritus Mentor and he kindly agreed. General Zaluzhny stressed the importance of creating a new force concept or a hub focused on modern technologies (in particular drones and RF/EW). It should be led by technologists, not the military or the government. Such a hub would explore all use cases for various technologies and their interdepencies. Right after our meeting, he was appointed the new Ukraine Ambassador to the UK, which surprised us all.
• Military cluster Brave1 conducted its first demo day with 10 startups. The demo day itself disappointed but we welcome this continuous flow of new initiatives, events, funds, and other forms of boosting the ecosystem.

D3 team hands General Zaluzhniy invitation to become our Emeritus Mentor

We end this time with a story on Ukrainian ingenuity in the battlefield, or the infinite sense of humor to cope with sometimes hopeless scenarios. A friend of our Associate Taras, who is serving in the Horlivka-Toretsk zero line, shared with him how he tricks the enemy with delivery of poisoned vodka bottles. The enemy happily accepts (as seen on video) and hopefully enjoys it til the end.

<aside> 💡 You can find previous updates on the link.

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