French impact firm Daphni agrees on defence tech policy following ‘productive’ team meeting

Defence tech funding in Europe reached record levels in 2025, partly a consequence of the ongoing war in Ukraine and geopolitical tensions with the US under Donald Trump.

“There are a ton of opportunities in that space right now,” Pierre-Eric Leibovici, managing partner at Daphni, tells Impact Loop.

The Paris-based VC recently closed a €260m fund to back science-based startups across Europe – and, naturally, the team have had extensive discussions on where to deploy that capital. One contentious sticking point, however, has been defence.

“There were quite a lot of different arguments from the team members…it was not a binary ‘defence or not defence’,” says Leibovici. “There was also a lot of discussion on what really counts as defence investing.”

After an extensive internal meeting, Leibovici says Daphni decided against investing in lethal weapons or tech solutions that specifically target the defence market. It would, however, consider dual-use companies, but those that lean more towards civilian applications.

Defence as a deeptech incubator?

Many key technologies today – including GPS, microwave, and the internet – were developed by the military, and Leibovici believes that the defence sector can still be a valuable breeding ground for game-changing technologies.

“We will remain an impact-focused firm, but we’re not dogmatic… we won’t ignore the real opportunities in this space,” he says, adding that the firm will evaluate each new potential dual-use investment on a “case by case basis.”

Leibovici insists that it is not entering dual-use because it’s “hot” or for “marketing reasons.”

“We are not in that category of investors deciding the strategy depending on the hot topics,” he says. “We are just investors having conviction and keeping our conviction.”

Broadly, Daphni – whose prior investments include Back Market, Swile, and Pasqal – will continue to focus on science-based climate and deep tech solutions, even if those sometimes overlap with defence markets.

A fusion investment in the works

Daphni is currently in the process of finalising an investment into an early-stage fusion energy startup.

For Europe's fusion energy startups, 2025 was a breakout year – with over $340m secured – far surpassing the previous record of $217m in 2024, according to Dealroom data.

“Fusion could solve a lot of problems,” Leibovici says.