EIC pivots to defence and dual use: what the change means for European deep tech

On 17 June 2026 the European Innovation Council (EIC) amended its 2026 work programme to open funding for defence and dual-use technologies. The Commission says the change implements the Defence Mini-Omnibus and aims to close capability gaps exposed by Russia’s war on Ukraine while supporting Europe’s technological sovereignty. Practically this means the EIC Accelerator and STEP Scale Up instruments will accept projects with defence or dual-use business cases and a new €100 million STEP Defence Scale Up call will provide direct equity financing to defence-focused companies.

What is changing now

Key operational changes announced by the EIC are concrete and immediate. Start-ups and SMEs working on dual-use applications can apply for the same EIC Accelerator grants and STEP Scale Up equity support as civilian-only projects. The EIC likewise launched a separate STEP Defence Scale Up call with up to €30 million in direct equity for eligible companies. According to the Commission, grants of up to €2.5 million remain available under the Accelerator while equity investments can reach up to €30 million per company under STEP. The EIC says it will co-invest in major rounds typically ranging from €50 million to €150 million or more, and that total round sizes should generally be three to five times the requested EIC investment.

Numbers, instruments and practical rules

The announcement bundles several financial instruments and operational actors. The EIC Accelerator continues to offer mixed grant and equity support. Grants remain capped at about €2.5 million. The STEP Scale Up strand, including the Defence call, focuses on equity investments via the EIC Fund. The Commission describes the Defence call as the first time any EU programme will invest direct equity in defence companies.

Who can apply and where

Eligible applicants for the Defence STEP call are start-ups, SMEs and small mid‑caps established in EU Member States, in European Economic Area countries that are associated to Horizon Europe and in Ukraine. The EIC also says applications to the dual‑use path are possible under the Accelerator and STEP rules. The STEP guidance emphasises that applicants must demonstrate investor interest for major rounds and that part of the funding round must be privately committed, reflecting the EIC Fund’s co-investment model.

Who runs and vets the investments

The EIC Fund is the EIC’s equity arm and manages the investment component. The European Investment Bank (EIB) acts as investment adviser and performs due diligence on potential investments. EISMEA, the European Innovation Council and SMEs Executive Agency, runs the grant component and overall programme implementation. The EIC Fund also works with a Trusted Investor Network of institutional private investors to crowd in capital alongside public funding.

Why the Commission says the change is needed

The Commission frames the move as a strategic response to security shocks and Europe's dependence on non‑EU defence technologies. It cites gaps exposed by Russia’s war on Ukraine, a fragmented set of investors for defence tech, and the absence of other EU programmes able to invest direct equity in defence companies. The change is part of a broader package including the Defence Mini‑Omnibus and elements of the ReArm Europe Plan intended to align EU budgets with defence technological priorities.

Key policy and legal concepts

Governance, safeguards and likely scrutiny

Opening EU public equity to defence companies is politically sensitive and legally complex. The Commission and EIC documentation flag a number of constraints and processes but the operational details will matter. Expect attention on at least three areas: export control and transfers, foreign ownership and control, and the handling of classified or sensitive information during due diligence and monitoring. National defence procurement rules and arms export licensing will remain a member state competency in many cases and can complicate cross‑border investment and production.

The European Investment Bank and EIC Fund processes will necessarily expand security due diligence and may require legally binding safeguards such as blocking minority rights, retained IP protections in Europe and conditions on transfer of technology or shares.

What this means for startups, investors and policy

For founders, the opening of EIC funding to defence work expands the pool of available early‑stage public capital for strategic technologies that struggle to attract traditional venture capital. For investors, public co‑investment can reduce risk and catalyse larger rounds but also adds compliance obligations and potential restrictions on exits. For EU policy the move recognises the strategic dimension of deep tech but also tightens the link between innovation policy and defence industrial policy.

Practical next steps for applicants

If your company is considering applying to the Defence STEP call or to dual‑use funding, prepare the following early: robust business plan and pitch deck, a clear description of the defence and/or civilian applications, an intellectually property and freedom‑to‑operate assessment, evidence of private investor interest or pre‑commitment (for STEP typically at least 20% of the target round), and documentation addressing ownership and third‑country control. Applicants should also plan for export and procurement compliance and be ready to discuss national security implications during due diligence.

Bigger picture: context and implications for Europe’s innovation ecosystem

Europe has long struggled with a funding gap in deep tech scale‑up stages compared with the United States and China. The EIC Fund and the new Scaleup Europe Fund were designed to channel public capital to crowd in private investment for strategic technologies. Extending these tools into defence reflects a political priority to reduce strategic dependencies and develop a European defence industrial base. That ambition is understandable given recent shocks but the change blurs lines between civilian innovation policy and defence industrial strategy.

Operationalising this pivot will require careful rule‑setting to avoid unintended consequences. Effective safeguards on ownership, export controls, IP localisation and exit conditions will be essential. There is also a governance question about democratic oversight and transparency when public equity enters military markets. Finally, investors and entrepreneurs will watch how the EIC coordinates with member state defence procurement, national security review processes and the European Defence Fund to avoid duplication and ensure complementary investment.

Bottom line

The EIC’s opening to defence and dual‑use technologies is a significant policy shift. It expands financing options for high‑risk, strategically important technologies at a stage where private capital can be scarce. The move addresses a real capability gap but comes with complex legal, ethical and geopolitical tradeoffs. Close attention will be required on vetting, ownership, export controls and the handling of sensitive technologies if the initiative is to strengthen Europe’s industrial base without creating new vulnerabilities.

For companies and investors interested in applying, the practical details in the STEP Defence guidance and the amended EIC work programme matter more than the headlines. Get pre‑commitments from qualified investors, prepare robust freedom‑to‑operate documentation, and be ready for expanded due diligence and national security scrutiny.

Quick reference — where to find more information

Read the amended EIC Work Programme 2026, the STEP Defence guidance note and attend the EIC info session on 24 June 2026. For support use your national Horizon Europe Contact Point, the EIC Business Acceleration Services and the EIC Community Platform. For investment queries consult the EIC Fund materials and the Trusted Investor Network.