Our First Annual Letter
Writen by
Niels Vejrup Carlsen, Founding Partner
Martin Majercin, Platform
One year ago we closed Fund I, Final Frontier Liftoff, with €4.5 million for early-stage investments in defence, space and cyber — backed by private investors who shared our conviction before it was consensus. The thesis was simple.
Our sovereignty is challenged in all domains; land, air, sea as well as in space and cyber. Autocrats around us try to change the world order to 'might is right'. We should sit at the table and fight for our values instead of being on the menu. Europe needs to rearm. Europe needs to lead again.
At the same moment in time, multiple technological breakthroughs are converging. Million-dollar equipment is destroyed by thousand-dollar drones. Space has become critical infrastructure and the ultimate high ground. The hybrid war in cyberspace is escalating through disinformation campaigns and attacks on critical infrastructure. Compounding it all, the Russian invasion of Ukraine dramatically accelerated defence innovation. Speed of innovation allows Ukraine to hold Russia back. Systems at the frontline are obsolete after only weeks. This disrupts market dynamics and erodes the domination of defence primes.
The political response is catching up. Budgets are surging across Europe. There is a push to buy European and build sovereign supply chains. But, incumbent industry cannot handle the furious innovation speed. Startups suddenly play a crucial role. A thriving startup ecosystem has become an essential strategic muscle for building a competitive and agile defence industry. An industry that delivers the technology we need for deterrence and conflicts today and tomorrow; not for yesterday's war.
Private capital is urgently needed for this transformation. Safeguarding our democracies represents a worthy cause as well as a generational financial opportunity for investors. This was why we founded Final Frontier.
Portfolio Performance
Twelve months later, we have built a portfolio of 12 investments across 8 countries and with a good spread across sectors:
• 8 Defence, 2 Space, 2 Cyber
• 8 of the teams have their main base of operations in the New Nordic region
• 4 of the teams come from Ukraine – with headquarters outside.
The portfolio is aligned with our geographical focus on New Nordics and Ukraine. The Nordics and Baltics have strong startup ecosystems and not too many entrenched defence primes blocking their path. The region has a proximity to the eastern front and the Arctic which draws out exceptional defence tech founders. The nations are small, wealthy and transparent. They have all supported Ukraine heavily and have strong ties to the Ukrainian defence tech ecosystem. Together this provides a good breeding ground for building a modern defence industry.
The portfolio also shows that we see Europe as one ecosystem. Our roots are Nordic, but if the best founders are in Kyiv, Prague or Munich, that is where we go.
Three portfolio companies have already seen significant valuation increases. External investors noticed their progress and extended recent rounds at significantly higher prices. We did not go looking for those extension rounds. They came to us. Our first annual accounts showed an increase in the value of the portfolio with 50% only three quarters in.
• TVPI 1.3 (Total Value to Paid In)
• MOIC 1.5 (Multiple on Invested Capital)
We are proud of this top tier performance. While it is still early, the trajectory makes us confident that we will provide excellent future returns to our investors.
We are happy to see the companies substantiate our thesis and underpin the valuation increases. They have real impact; they introduce novel capabilities; they do it fast and most importantly they show early stage startups can navigate procurement processes and grow commercially. Nine of our twelve companies are already generating revenue.
Commercial Traction and Impact
Our inaugural Final Frontier Investor Day on January 8th brought the portfolio close to 100 defence ecosystem players and most importantly, to our founders and investors. For the first time, we showcased the founders, companies and products up close. Not just slides. Real technology that is saving lives, and prototypes about to introduce entirely new capabilities.
STORMBORN presented their all-weather autonomous maritime drone publicly for the first time that day. Three months later, they were in Rostock demonstrating surveillance capabilities to Baltic nation navies at SeaSec. First demo to navy demonstration in one quarter. That is what startup speed looks like.
Blinktroll now have contractual engagements with several European Ministries of Defence for addressing critical capability gaps in NATO. A team of twenty people, solving challenges that the big primes have not.
Several of our portfolio companies have landed their first Ministry of Defence contracts in and outside Ukraine, on nothing more than early-stage funding and within their first years of operation. The procurement walls that kept startups out are starting to crack. The process is slow, circuituous and frustrating. But the walls are cracking.
Our companies have trained soldiers, cleared mines, transported wounded, prevented infiltration, tracked satellites, enabled GNSS-denied navigation, protected borders and guided drones to their targets. That is the impact. That is what the capital invested in Final Frontier made possible.
Market and Positioning
During the past year, the landscape around us has changed dramatically. In 2025, private capital invested in European defence tech grew with 55% to $ 8.7 billion according to NATO Innovation Fund. This is good news for Europe, but two things stand out.
Only around 1% of that capital was invested in Ukrainian teams. One percent. Yet, this is where the most innovative, battle-proven technology is being built. Only two countries truly understand what the modern battlefield looks like: Ukraine and Russia. We choose to side with Ukraine, and we are confident that our 1/3 Ukrainian weighting will prove to be one of the smartest allocation decisions in this fund.
The other observation is that the growth in invested private capital is mostly late stage. Investments are flatlining or declining at early stage. It is great news that we are getting better at scaling. But, there is a lack of capital at early stage for creating strong startup dealflow. There are still too few targets in Europe for the many later stage funds. This drives valuations higher than commercial traction justifies.
Final Frontier is still the only active pure play defence tech VC fund in Denmark, and one of very few in the New Nordic region. We are happy with our early stage positioning. It addresses the market need and it represents an extraordinary financial opportunity.
During the last year we observed the 'early stage gap' dynamic in our own portfolio. We have invested in strong companies at valuations lower than anticipated. We have seen significant follow-on uprounds by investors wishing to get on the cap table as soon as they see relevant commercial signals and preempting the competitive scale up rounds.
The strength of our 'specialist' positioning has become apparent. The most important defence tech companies work quietly, they build in trusted circles, and what they do is sensitive and complex. Generalist investors find them too late. Being embedded in this world from day one has allowed us to see opportunities earlier and engage with the strongest founders. Strong founders are attracted to our focus on defence, space and cyber; our mission driven approach; our value add and our network.
Building the Ecosystem
The founders say our manifesto resonates. That we are one of the few investors who speak plainly about how things are and how urgently Europe needs to move. We are humbled by that, and glad to find ourselves working alongside people who share the same sense of purpose.
We set out to document the stories of founders who are proving that Europe can rearm and lead again. That project became Rockets and Radars, which has grown into one of Europe's most loved podcasts in the industry. Over 40 founder stories have so far reached more than 1.4 million people. These stories forward inspiration and knowledge to the next generation of founders.
Our commitment to the ecosystem makes founders seek us out. We have been invited to participate in rounds because they would like us on the cap table and not because of the check. They recommend us to founders they respect which is the best deal sourcing we could hope for. We work diligently to continue earning that kind of trust.
What Comes Next
We continue to be dedicated to helping the twelve companies in our Fund I portfolio reach commercial success and lasting value.
We have shown that a specialist, mission-driven fund can find the best founders early, build a portfolio with global top tier performance, and with real impact on European defence.
On the back of that we are expanding our investment partner team and have commenced fund raising for a substantially larger Fund II. Fund I investors are backing us and have soft committed to Fund II more than their commitment to Fund I. This makes us both proud and happy.
Fund II aims to have more fire power for bigger bets on the founders who will shape what European defence looks like for the next generation.
The next five years will determine who leads defence, space and cyber for the next fifty. We are one year in. The window of opportunity is still open. It will not stay open forever.
We could not let the anniversary pass without saying: thank you — to our investors for their capital, to our founders for their courage, and to everyone building this with us.