European drone and counter-drone scaleups have a new source of industrial growth capital: the European Innovation Council's (EIC) STEP Scale Up Defence call, with a €100 million budget for 2026 and requested equity investments of €10 million to €30 million per company. Applications close on 28 October 2026 at 17:00 Brussels time, according to the live call.
The opportunity is concentrated on companies preparing substantial financing rounds. The EIC expects rounds of €50 million to €150 million or more, backed by an investor already prepared to commit a meaningful share. For European defence suppliers, the commercial question is whether they can turn a credible technology and customer position into a financeable plan for industrial scale.
Capital for the company's next stage
The Commission's June announcement opened EIC support to defence and dual-use technologies and introduced this dedicated defence call. It provides equity through the EIC Fund, with no grant component. Investment terms are negotiated company by company.
That structure suits a different preparation process from a research-project application. Management needs to explain the whole financing round, the business it will build and the risks that prevent market investors from funding the expansion in full. A production ramp, qualification programme or supply-chain investment belongs within that company-level case.
For a drone manufacturer, a convincing plan could connect customer demand to assembly capacity, testing, component availability and working capital. For a counter-drone supplier, it could connect validated performance to repeatable manufacturing and deployment support. These are commercial preparation priorities, rather than prescribed spending categories in the call.
Which companies fit?
Drones and counter-drones are explicitly in scope. The amended work programme, Section VII, lists unmanned aerial systems of all classes, swarming systems, jammers and anti-UAV systems. It also covers areas including electronic warfare, optronics, radiofrequency systems and unmanned maritime platforms.
The proposed technology, product or service must have a primary defence application. Predominantly civilian or dual-use applications are directed to the general EIC STEP Scale Up call. Criticality also matters: the innovation must bring an innovative, emerging and cutting-edge element with significant economic potential to the internal market, or reduce or prevent EU strategic dependencies.
The strongest fit is therefore a technology company with credible defence end-user traction, evidence supporting its current technical readiness and a substantial expansion to finance. The evaluation examines those features alongside intellectual property, the team and realistic procurement and qualification pathways. It asks applicants to substantiate readiness rather than specifying one universal minimum technology-readiness level in the defence criteria.
A specialist component or software business can have a relevant case alongside a platform manufacturer, provided it meets the scope and investment requirements. A promising prototype still seeking its first serious investor is much further from the intended financing profile.
The investor commitment comes first
An applicant needs an equity pre-commitment from one qualified investor covering at least 20% of the total target funding round. The submission guidance explicitly says the total round includes the requested EIC investment.
The portion meeting that threshold must be fully uninvested on the date of the letter. Several smaller commitments cannot be combined to satisfy the single-investor requirement. The investor may already hold shares and need not lead the round. The letter is non-legally binding, but the commitment must be equity: quasi-equity does not count towards the threshold, and investor screening applies.
There is a financing detail worth resolving with EISMEA, the agency administering the call, before fixing the round structure. The work programme's application wording describes the total round as at least three to five times the requested EIC contribution. Its evaluation table asks whether the investment will attract three to five times the EIC amount from other investors. Applicants should reconcile those formulations rather than build their financing plan around the lower reading alone.
For founders and investors, this makes the application a joint financing exercise. The round size, investor letter, EIC request and financial model need to tell the same story about capital required and progress it will fund.
Establishment, control and industrial value
Eligible applicants are single companies classified as SMEs, including startups, or small mid-caps with up to 499 employees, established in the EU, Ukraine or an EEA member associated to Horizon Europe. An investment holding company must meet the same geographic condition. This is a narrower perimeter than general Horizon Europe association.
Control is assessed separately from incorporation. Direct or indirect control by a third country outside the permitted group, or an entity from such a country, triggers exclusion. The work programme provides a guarantee route for companies established in the EU or an eligible EEA country: appropriate guarantees must be made available to the Commission and approved under that country's national procedures. The application includes an ownership-and-control self-assessment.
The investment also carries industrial-policy conditions. The EIC Fund must ensure that companies retain most of their value, including intellectual property, in the EU, eligible EEA countries or Ukraine. Safeguards can address ownership changes, governance, IP, activity locations and supply-chain security. Boards should assess these alongside existing shareholder rights and future financing or exit plans.
Technology dependence deserves equal attention. The evaluation asks whether the company controls its core technology without undue third-country dependency, including export-control constraints such as ITAR/EAR. For a supplier expanding production, the relevant preparation extends from the capital structure to the rights and restrictions attached to critical technology.
What to prepare before the deadline
The formal package includes a business plan of up to 50 pages, a pitch deck of up to 15 pages, the investor letter, a financial plan, freedom-to-operate material, key-person CVs and the control self-assessment. The EIC scheme page provides the application guidance.
The useful management work is to assemble an investment case behind those documents:
Security requirements can affect preparation well before submission. Classified supporting documents require contact with EISMEA at least 30 working days before the deadline and must never be uploaded through the portal. As of 11 October, that advance-contact window has passed for the October deadline. The call also requires respect for international humanitarian law and meaningful human control over AI-enabled weapon functions.
Selection starts the investment process
A positive jury outcome recommends a potential investment. Due diligence, negotiation and an EIC Fund investment decision follow; the amount can be reduced or rejected. A STEP Seal can also be awarded without an investment recommendation. The Commission expects results in early 2027, rather than funding closure by the application deadline.
For companies already preparing a large round, STEP Defence merits immediate attention from management and their principal investors. The most persuasive case will link a defence capability Europe needs to a company that can deliver it at scale, with a credible financing plan and an ownership structure compatible with the programme.
Terms checked against the official call and amended work programme on 11 October 2026.