Dear Investors,

We brought 13 of the best drone tech companies, including 5 of our portfolio startups, to London this past week for a 2-day event we co-organized with the UK government. The goal was for these companies to forge partnerships with counterparts in the UK and build better together. More details below.

We will be making our regular quarterly capital call this week for Q2. We had delayed the call to add the two new LPs. However, we decided to move ahead without them this one last time while KYC on them is still on-going.

Deal Flow

Total = 391 (+9)

We are looking into an airborne radar German company that operates in missions with interceptor drones, Alpine Eagle. They are focusing on the counter Lancet use case. This is a massive problem on the frontline right now for the AFU. Deck here.

Portfolio news

• Guardian RF was accepted into the Y Combinator🎉. Their acceleration program starts mid-July, during which they will come to Ukraine for testing and data collection that will improve their portable cUAS solution;
• Swarmer was featured in a cover article for Politico. You can check it out here. We were at the testing ground with them last week, where they demonstrated 6 drones completing a mission with the click of one button and no pilots. Three recon drones assessed the field, gave coordinates to three bomber drones, which in turn dropped the warheads at the target. Here is a short video. The New York Times was there as well to document the results for an upcoming article. Stay tuned!
• Neros Technologies had their official $10.9M funding announcement led by Sequoia. You can read the Founder/CEO Soren's blog post announcement here.

The D3 Team at the Swarmer Field Testing with the CEO/Founder

The Future: drone missions from a laptop using Swarmer and no pilots.

GR and Ecosystem

• The new mobilization law came into full effect on May 18th. All companies are scrambling to understand and take action to reserve their workforce. D3 organized a workshop with a lawyer representing the MoD and the lawyer we hired to ensure we can properly handle mobilization of our own male team members. The session was extremely useful and popular, with lots of follow up questions. This is a massive issue and distraction for all defense founders in our Ukrainian portfolio now. We are doing everything we can to help them navigate the reservation process and be in a good place. The Founder/CEO of Drone Space received 5 draft notices already.
• We brought 13 Ukrainian companies to London for the Drone Conference and speed dating with UK companies such that together they can tap into the UK MoD drone task force ($300M) and the Hirst Funding ($4.5B) in the form of a credit line to the Ukrainian government. More details are attached. We worked closely with the UK Ministry of Business and Trading and ADS (UK defense association) to ensure UA companies learn how to open shop in the UK and who to partner with. Such initiatives help the UA companies go global, tap into various budgets and be less reliant on one buyer only domestically. Overall, they will be in a better position to attract further investments, boost revenues, find technology partners, and invest in their own R&D.
• We brought colonels from the newly formed Ukrainian Unmanned Systems Directorate (Drone Force) to share the technology needs for this year with the UA and UK companies.I was a moderator for most of the conference and had the honor of hosting the founder of Baykar, Haluk Bayraktar, and inventor of the legendary Bayraktar drone. He is investing heavily in Ukraine with a new factory, new office, and growing R&D team. We see an ever increasing number of international companies setting operations in Ukraine.
• While in London, I met with the team from C5 Capital, which is launching a private debt fund (Victory Fund) to extend credit lines to Ukrainian defense companies. This is exactly what we have been hoping for the past year. Access to working capital continues to be a major pain point and they plan to address it head on. We will provide them with all the diligence work we had previously conducted in this direction.

London Drone Conference. On the screen are the needs of the Ukrainian Unmanned Systems Directorate for this year.