NATO Innovation Fund Restructures Investment Team to Capitalize on Rising Defense Momentum

Two years after raising $1 billion from over 20 countries, the NATO Innovation Fund (NIF) is entering a new phase marked by the introduction of two new partners and the departure of one founding team member.

As military spending increases among NATO nations, there has been a significant rise in investment in dual-use technology since the initiative’s launch in 2021. Once shunned by institutional investors, defense and resilience technology recently surged to an unprecedented level, making up 10% of all VC funding in Europe, where many of NIF’s investors are situated.

This rise in interest may have given NIF a first-mover advantage, but the fund has also faced management challenges and notable exits. Following a reaffirmation of its importance at the NATO Summit in The Hague last June, NIF has assembled a nearly entirely new investment team consisting of three partners.

Originally having four partners along with a managing partner, a source familiar with NIF indicated that the new flat, three-partner structure is expected to remain in place for the foreseeable future, suggesting no additional hires are likely. Although there had been speculation about these two appointments, the new partners’ identities were only confirmed recently.

The newly appointed partners are Ulrich Quay and Sander Verbrugge, both from Amsterdam. Quay, a German national, previously served as vice president for corporate investments at BMW, where he established and led the corporate venture fund BMW i Ventures. Verbrugge, who holds a Dutch PhD in molecular biophysics, was formerly a partner at the deep tech VC fund Innovation Industries and has experience at NXP, a semiconductor design and manufacturing firm. The third partner is Patrick Schneider-Sikorsky, a London-based VC and the last original member of the investment team. Additionally, founding partner Kelly Chen has confirmed her departure to TechCrunch, stating it was her choice to pursue a new opportunity. Chris O’Connor, another founding partner, departed earlier this year for similar reasons.

Chen currently sits on the boards of various NIF-backed startups but will transition her board responsibilities upon completing her tenure at NIF, as reported by TechCrunch’s chief communications and marketing officer, Amalia Kontesi.

Despite calls for faster capital deployment, she has emphasized that NIF “is on track to meet [its] investing goals for the year.” To date, NIF has made 19 investments: seven into funds like OTB Ventures and twelve into startups such as Space Forge and Tekever, which specializes in dual-use drones.

However, while the addition of new partners with impressive industrial and scientific backgrounds is a positive step, it may not address concerns from stakeholders who wish to see the fund invest in Ukraine or in strictly defense sectors in light of Russia’s military actions. Nevertheless, it aligns with NIF’s broader mission to “empower deep tech founders to address challenges in defense, security, and resilience.”

Moreover, NIF has increased its emphasis on defense initiatives. Its team has played a crucial role in developing NATO’s Rapid Adoption Action Plan, which aims to accelerate the integration of new technological products for defense. NIF is also expanding its Mission Platform Group with key strategic hires, including John Ridge, appointed as chief adoption officer in 2024, to assist portfolio startups with military procurement processes.

Regarding the new partners, they were recruited through a method previously described by VC Michael Jackson as similar to “building a boy band” — selected by NIF’s board of directors and approved by LPs, rather than through historical team dynamics or personal connections.

This strategy may be necessary for an organization with 24 countries as limited partners, yet it was often cited as a reason the previous team struggled to work cohesively. This time, all three partners had the opportunity to meet during the recruitment process and have spent time together since then to ensure a smooth transition and enable the team for long-term success, as noted by Kontesi.

In an exclusive comment to TechCrunch, NIF’s vice chair, Professor Fiona Murray, compared the organization to a startup. “We take pride in our achievements, but like any effective team, we are continuously learning, experimenting, and improving: speeding up our processes, expanding our support for startups, enhancing ecosystem building, and recognizing the wider need to develop the sector and capital stack.”

Murray expressed satisfaction in assembling a skilled team capable of working effectively, creatively, and swiftly. “They will allow us to move more rapidly and decisively in driving the Alliance’s technological agenda and supporting the best founders across European ecosystems,” she remarked in a joint statement with NIF’s chair, Klaus Hommels.

Hommels’ other investment activities have raised concerns about potential conflicts of interest, but no changes to his role have been noted during NIF’s recent LP meeting in Venice. Instead of focusing on its reorganization, NIF appears set on helping NATO strengthen its resilience. “In this next phase,” NIF’s vice chair commented, “you’ll see us refocus on DSR opportunities and emphasize the importance of building companies that can achieve industrial scale and genuinely support ecosystems across Europe.”