Dear Investors and Friends of D3,

This past month has been the peak of the defense conference season in Europe. Despite the substantial investment of time and energy in all these events, the outcome has been a net positive for D3, its portfolio, and the Ukrainian defense ecosystem. The Defense Tech Valley Summit in Kyiv was clearly the most impactful and interesting of all events, with the highest ever concentration of defense VC investors to visit Ukraine at one time, and mostly for their first time. Nonetheless, the more established VC household brand names did not show up. Majority of the investors who attended were newer, smaller, hungrier and more willing to explore what Ukraine has to offer in modern warfare. The next investor summit in Kyiv will be on February 18th, 2025. You are all invited!

Defense Tech Valley Summit in Kyiv

Deal Flow

Total = 490 (+18)

We have done our second follow-on investment. This time into Guardian RF. Details below.

Portfolio News

Fundraising

• Guardian RF has finished their YC program and closed a $2.17M (SAFE @ $20M cap) round led by Space Capital 🚀. D3 participated with a $75K follow on check. Space Capital is a good fit based on their work with sensors and network management systems for defense. Guardian RF first product is the portable drone detector Scout with the following advantages:
  • Handheld drone detector with low size, weight, and power (SWaP) built from off-the-shelf components for under $800.
  • Sweeps the entire spectrum, flagging drone signal bursts for low-latency classification on the edge.
  • Outperforms competitors in range and classification, especially in noisy urban environments. 6-hour battery life.
  • Custom made SDR to decrease price and footprint.

Guardian RF Seed deck:

Guardian RF Seed Deck.pdf

Product Launch

• Frontline has launched ZOOM, an Ukrainian “Mavic3 analog” as announced by Forbes Ukraine. There are thousands of Mavic3 ISR drones being used on the frontline today. ZOOM offers an alternative to the Chinese product with proprietary radio and video links as part of Frontline’s Hertz platform. This is quite an achievement for secure and jamming resistant control and navigation! The drone is equipped with a visual navigation module that allows it to hover over the terrain at an altitude of 200 meters, at wind speeds of more than 10 m/s and hold its position without operator assistance. Additionally, there are automatic takeoff and landing functions. None of these features are trivial. It took DJI about a decade to develop similar capabilities.

GR/Ecosystem

We hosted a side event around the Defense Tech Valley Summit and invited the Advisor to President Zelensky and former Minister of Strategic Industries Oleksandr Kamyshin. We discussed the top of mind topic of export controls. Ukrainian defense companies are pressuring the government to open the borders so they can create partnerships, JVs, establish additional manufacturing sites in other countries and be well positioned to go global once the war ends. Having international sales now also helps fund R&D and create cash flow for scaling of the domestic production with higher margins than the capped 25% to the Ukrainian government. Although there is no legal ban on exporting defense goods during the war, permits are never given and so there is a de facto ban. We are working with defense producer association TechForce and with the media to lobby for more business friendly rules. We have also conducted a workshop to guide our local portfolio companies on how to navigate these muddy export waters. A new legislation is coming into effect soon.