European VC breaks taboo by investing in pure defense tech from Ukraine’s war zones

Anna Heim

Wed, Jul 9, 2025, 12:00 AM 7 min read

Defense tech has gone from a no-go zone for VCs to a hot investment sector. However, dual use — meaning that the technology must also have civilian applications — is still a requirement for most of them, including the NATO Innovation Fund.

Estonian VC firm Darkstar breaks from this trend by sometimes investing in purely military applications, with the goal of helping rearm Europe using combat-proven solutions emerging from Ukraine. “This is very critical, not only today but for the next 10 years,” said its cofounder and general partner Ragnar Sass (second from the left in the picture).

The firm takes a hands-on approach to this mission, helping startups bring products to military customers both in Ukraine and throughout Europe. For Ukrainian teams, this means not just funding but also support with setting up compliant entities in NATO countries like Estonia. “In any company which wants to be part of European procurement or even grants, the operational side has to be perfect,” Sass said.

With a fundraising target of €25 million (approximately $29.2 million) in the next six to 12 months, Darkstar intends to focus on pre-seed and seed rounds, with a usual check size of €500k to €1 million. It has already made two investments: in Ukrainian-Estonian startups FarSight Vision, which specializes in geospatial analytics and 3D mapping for drone pilots, and Deftak, which develops ammunition for drones.

For Sass, investing in weapons wasn’t an obvious move. A key figure in the Estonian startup ecosystem ever since Skype’s founders funded his first startup, a community for pet owners, he went on to co-found CRM and sales tool Pipedrive, and used the proceeds of that unicorn-sized exit to make more than 50 angel investments.

Some of these investments became unicorns, too, including Veriff. But none of them were in defense, even after Russia’s full-scale invasion of Ukraine in 2022 prompted Sass to deliver trucks and aid to Ukraine, to which he has personal and business ties.

“It took quite a long time mentally to understand that I want to be involved in weapon systems,” Sass said. He eventually made his choice a year and a half ago when Estonian drone startup Krattworks became his first defense investment.

Krattworks marked a turning point for Sass; it was also his last investment as an angel investor. Sass is now putting his money into Darkstar, which started out as a coalition organizing hackathons and bootcamps, leveraging his decade-long experience at hackathon community Garage48 between 2010 and 2020. Since then, Sass went on to fund and sell another company, Salto X, although it is unclear whether he made money from that exit.