European defence bets on SME innovation

Among many other initiatives, the European Defence Fund (EDF) launched, in mid-February, two non-thematic calls for proposals aimed at fostering SMEs participation and strengthening the technological and industrial capabilities of the European Union. With attractive funding that can cover up to 100% of eligible costs, these initiatives are particularly targeted at innovative SMEs and consortia capable of meeting the critical needs of the defence sector.

According to Laurent Pelliser, senior consultant in European projects at Zabala Innovation, these initiatives, which will remain open for submissions until 16 October 2025, “reflect a clear EU intention to develop its strategic autonomy in the field of defence by relying on the innovation and responsiveness of its SME ecosystem.”

The EDF-2025-LS-DA-SME-NT call specifically focuses on European SMEs, encouraging their role in the rapid and cost-effective development of new defence technologies. The goal is to support these companies in transforming their research results into operational products, by funding activities such as prototype development, testing, validation, and certification.

This initiative is aimed at projects lasting between two and four years and budgeted under 6 million euros. To be selected, projects must demonstrate their innovative nature, their potential impact on European defence capabilities, as well as their technical and financial feasibility. In this call calls, funding can reach 90% of eligible costs in some categories of activities, and even 100% with bonuses for projects involving SMEs and promoting transnational cooperation.

“This measure aims to compensate for the lack of resources of these companies, often hindered by significant financial constraints,” Pelliser specifies.

The second call, EDF-2025-LS-RA-SMERO-NT, focuses as well on the role of SMEs and research organisations (ROs) to support innovation in defence. One of the major aspects of the call is its research nature rather than development, with a focus on the generation and integration of knowledge as well as studies and design, where all activities will benefit from 100 % funding based on eligible costs.

The projects to be selected will be based on innovative technologies and solutions capable of supporting readiness, deployability, reliability, safety and sustainability of forces, with a budget to be kept under 4 million euros. A specificity, however, is the recommendation to build on research and solutions initially developed for the civil sector and to continue work done in research projects previously funded by EU programmes.

Strategic autonomy and rigor

“For each of these calls, only SMEs and ROs are allowed in the SME-led consortium, with at least 60 % of the budget to be attributed to the SMEs,” Pelliser emphasises “This approach offers great flexibility to project promoters to respond to emerging defence needs but also to provide opportunities for disruptive technologies”, he adds.

Indeed, the emphasis is on strategic autonomy: by funding innovative projects with high technological potential, the EU seeks to reduce its dependence on foreign suppliers and strengthen its industrial capabilities. “The goal is to ensure a solid and resilient European supply chain, capable of responding quickly to security challenges,” says this expert.

The two calls for proposals are distinguished by particularly demanding evaluation criteria, which go beyond technological innovation. In addition to the potential impact on defence capabilities, the EU will carefully examine the technical and financial feasibility of the projects, as well as the capacity of the promoters to carry them out. “The EU wants to avoid funding promising projects on paper but unfeasible in practice. That is why the evaluation will also focus on the experience and skills of the project teams,” Pelliser explains.

This rigour is part of a desire to optimise the use of public funds and ensure concrete benefits for Member States. The selection process will also include an analysis of the cost-effectiveness of the proposed technologies, to favour solutions offering the best compromise between performance and cost.

The challenges of transnational cooperation

The EDF also aims to promote projects involving several member states, to strengthen the interoperability of European defence capabilities. Transnational consortia applying for higher technology readiness levels, namely development action, will be able to benefit from funding rate-impacting bonuses based on cooperation beyond borders and specifically with SMEs and mid-caps. “Transnational cooperation is crucial to pool skills, strengthen the integration of the European defence industrial and technological base, and form high-level consortia,” Pelliser insists.

This collective approach aims to avoid the fragmentation of the European defence market, often criticised for its lack of coherence and costly duplications. By favouring synergies between SMEs, research centres, and large industrial groups, the EU hopes to optimise its investments and accelerate the development of strategic technologies.

Flawless preparation

The timetable for these two calls, like the rest of the EDF initiatives, requires meticulous preparation and rapid mobilisation of project promoters. “SMEs will need to ensure they have complete and convincing documentation, as competition will be tough,” Pelliser warns.

The duration of the projects, between two and four years, is intended to be compatible with the rapid innovation cycles of the defence sector. By directly funding the development of prototypes and their validation, the EDF seeks to shorten the time-to-market for new technologies.

These two calls are part of a broader dynamic aimed at consolidating the European defence industrial and technological base, as evidenced by other EDF 2025 initiatives. The increased use of innovative SMEs reflects a desire to diversify sources of innovation and encourage greater agility in the face of emerging threats. “It is essential to involve SMEs in this strategy, as current events show that they are often more responsive and capable of providing disruptive solutions,” Pelliser concludes.