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GREEN FLAG
VENTURES
Issue # 5 | 1 OCTOBER 2026 | Kyiv |
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What's happening? Thanks for dropping in.
Since our last issue, European defense money moved toward NATO’s eastern flank. The EU named its first five joint defense projects, among them a sensor and air-defense belt from the Arctic to the Black Sea, with Ukraine as a named partner; the Baltic defense ministers asked for €500M in counter-drone funding (for 2026!); and a NATO jet shot down an armed Russian drone 100 km from Vilnius, heralding our arrival a few days later. In Kyiv, the interceptor race is heating up.
We don't reprint wire copy and we don't market our portfolio. We pull the signal out of the noise and pipe it straight to you. NO AI slop. Only what we see, assess, and expect.
THREE THINGS TO KNOW
If you read nothing else
1. The EU set a €190B target for five joint defense projects and named Ukraine as a partner
On 28 September the Council named its first five European Defence Projects of Common Interest, with a combined target of €190B by 2036. We’re deep in two of them: DECODER (drones and counter-drone; €3.5 to 5B by 2033) and Eastern Flank Watch (the sensor and air-defense belt from the Arctic to the Black Sea; €60 to 100B by 2036). Starter tranches are €325M of EDIP money; the rest is to come through the European Competitiveness Fund. Norway and Ukraine are named partners.
Sequence matters. Five days prior, the Estonian, Latvian, and Lithuanian defense ministers jointly asked von der Leyen for €500M more in counter-drone funding: joint procurement, European vendors first, money this year. National budgets are already there: Estonia above 5% of GDP for 2027 with a dedicated €100M drone line; Denmark adding DKK 22B; Poland the largest borrower under the EU's SAFE loan program at €43.7B. In Issue #3 we called AGILE's €115M a small number and a large precedent. This is the large number, landing in exactly the categories Ukraine's ecosystem already builds.
2. A NATO jet shot down an armed russian drone over Lithuania. Lithuania and Sweden had already moved to buy interceptors
On 15 September an Italian Eurofighter on Baltic Air Policing destroyed an armed russian Gerbera between Kaunas and Kaišiadorys, the first shootdown in Lithuanian airspace. President Nausėda said the drone was bound for Ukraine and knocked off course by Ukrainian electronic warfare; that close to the border, Vilnius gets minutes of reaction time. On 24 September a drone crashed near Solca, in Romania's Suceava County, during a 282-drone attack on Ukraine, and Moldova logged four incursions the same night; President Sandu had already counted 39 this year (against 17 in all of 2025).
Lithuania authorized its Defence Resources Agency on 2 September to bypass standard procurement for interceptor drones and radars; Sweden tasked FMV a week later to buy interceptor UAVs. The shootdown made their case: a Eurofighter scrambled against a $10K drone is the interception-economics problem from Issue #1, now on NATO soil. Kyiv has had this requirement since 2024. Vilnius, Warsaw, and Stockholm now have it too, with budgets attached.
3. Ukraine stops more than 90% of propeller-driven Shaheds but only 57% of the jet-powered ones
Moscow is shifting to the jets: 86 of the 124 drones launched in a daytime attack on 28 September were jet-powered; jet launches ran around 1,500 in July and more than 2,500 in August; production capacity has reached about 3,000 a month, in line with a stated plan of 36,000 to 40,000 a year. The piston Geran-2 flies at about 180 km/h; the jets reach 500 to 600.
What’s the point? Triple the speed is a different engagement envelope, not a harder version of the same problem. Most of today's interceptor capabilities (globally, exclusive of very expensive missile defense systems) sit outside it.
Kyiv's answer is arriving in product form, but very slowly. Zelensky said on 25 September that 67 Ukrainian companies are developing interceptors, three to five have working results, and domestic jet-engine production is coming. A Wild Hornets Sting costs about $2,000 against a $20K to $50K target; its successor, the Sting S, has downed about ten Geran-4s and several Geran-5s in combat testing. Brave1's gap list, published 11 September, names what is still missing: fiber-optic FPV counters, optical and acoustic detection, small tactical radars, terminal-autonomy SHORAD, and, per the Czech Alatyr Group, the 2 to 8 km altitude band. That list is the next two years of counter-UAS demand. Every item on it is being solved by a company that has to ship this month, not next year.
SECTOR SIGNALS & EVOLUTION
What we see across the board
Global
Canada, Australia, and Türkiye are preparing Drone Deals with Ukraine. Canada signed a 100-year partnership and a defense cooperation declaration on 10 September and is targeting millions of drones, a third of them for Ukraine; a Canadian Drone Deal is expected next. On 24 September Australia signed a security agreement at UNGA and instructed its team to prepare one. Türkiye is in preparation as well.
→ The Defender (24 Sep) · Bloomberg (10 Sep) · United24 (24 Sep)Japan selected an interceptor from a maker with Ukrainian partners. After trials from 15 July to 6 August, Tokyo chose Terra Drone's Terra B1 from four finalists and 38 proposals; first deliveries to the Maritime Self-Defense Force were expected in September. Terra Drone builds its interceptor line with Ukraine's Amazing Drones and WinnyLab. Issue #3 covered the trials; this is the result.
→ United24 (27 Aug)Defense-tech venture funding is at a record and concentrated in a few rounds. PitchBook counted $35.6B into defense and defense-adjacent startups in the first half of 2026, two-thirds of the 2025 total; the top ten rounds took 62%. The same firm's count of disclosed venture investment in Ukrainian defense tech for all of 2025 was $57.2M.
→ Tectonic citing PitchBook (2 Jul)
United States
The US is buying and testing Ukrainian systems; the framework agreement is still unsigned.
Purchase. On 18 September the US Army awarded Skyeton's American subsidiary a $10.64M firm-fixed-price contract for Raybird reconnaissance drones. Raybird has more than 350,000 combat hours; Skyeton announced a North Carolina plant in July.
Evaluation. Under the $1B Drone Dominance program, F-Drones delivered 2,000 F10 strike drones this summer, and Unwave's electronic warfare systems were used in the program's trials at Fort Carson.
Framework. The broader US-Ukraine drone agreement (company-to-company cooperation, IP protection, exports that do not divert supply from the front) was ready for signature at UNGA and remained unsigned as we went to press.
Europe
Joint-production agreements with Ukraine are being signed faster than they are being implemented. The Ukrainian Council of Defense Industry counts roughly 25 Build-with-Ukraine agreements signed in the past year. The KSE Institute's September report counts about 41 partnerships in the pipeline and at least 180 business-to-business partnerships since 2022, with about 22% already stalled, usually at an early stage. Eleven countries have now signed Drone Deals, and KSE counts roughly 20 at some stage. Finland became the eleventh at UNGA on 23 September, with roughly 90% of the drones built there going to Ukraine and LOIs signed by Insta, Boomeranger, and Patria; Latvia is siting its plant in Latgale, on the Russian and Belarusian borders; Germany's text is "being finalized," with 50,000 Shrike FPVs and 15,000 STRILA interceptors already funded. LOIs are not traction; booked revenue and adoption are. Quantum Tencore shows the pace that is possible: memorandum in February, German production in April, a 2,000-unit order in June.
→ KSE Institute (Sep 2026) · Helsinki Times (23 Sep) · EC DG DEFIS (11 Sep)
Ukraine
Swarmer agreed to acquire Ratel Robotics for up to $224M, one of the largest deals in Ukraine's unmanned-systems market. On 10 September Swarmer (Nasdaq: SWMR) announced a definitive agreement to buy the Ukrainian ground-robotics maker for cash, stock, and earnouts through 2028. Per the companies, Ratel has secured $86M in contracts this year, accounts for roughly 37% of Ukraine's UGV procurement spend from January to mid-April, and brings more than 300 staff. For scale, Brave1 counts about $105M raised by all Ukrainian defense-tech startups in 2025. The Wall Street Journal's headline: "Drone Deal Kicks Off Consolidation in Ukraine's 500-Company Industry." We will leave the analysis to others. (Disclosure: GFV Fund I holds a position in Swarmer; Justin serves on its board.)
→ Swarmer (10 Sep) · SEC Form 8-K
FROM THE ROOMS WE’RE IN
What we hear that's not in the press
The whole team spent 11 days together in September across Kyiv, Stockholm, and Vilnius: roughly forty meetings with the portfolio, primes, banks, and two governments. Three things we brought home:
Nordic buyers told us specifically what they want from Ukraine. In Stockholm, the M&A team of a major prime listed it: cheap data links on small platforms, cross-domain technology that falls between their business areas, anything supporting Ukraine's fight. A large industrial's ventures arm wants manufacturing conversations with Ukrainian companies and offered to put us in front of its executive board. One of the region's biggest banks, which stood up a defense desk within the past year, is sending Ukraine-linked companies to us for assessment. At breakfast with senior Swedish defense leadership, the agenda was alignment between Ukrainian and Swedish manufacturers and an update on russian tactics. Two years ago we were the ones asking for these meetings.
Lithuania's government is buying counter-drone systems, and almost no outside capital is looking at its founders. Two days in Vilnius: a sovereign fund, four founders, a defense VC run by a former vice minister, and the Defence Resources Agency. The agency is buying interceptors, passive detection, command and control, and jamming, and runs sandbox trials open to foreign companies. The government is actively recruiting investors. The Americans noticed the same week: Mach Industries signed a declaration of intent with the ministry on 23 September to build UAVs in-country. Our read: the most under-covered defense-tech market in Europe.
Nordic companies are asking us for introductions into Ukraine. A Swedish uncrewed-surface-vessel company setting up in Odesa asked for testing and validation introductions; a Swedish interceptor company wants to test with Ukrainian systems this fall. Nordic firms need a way into Ukraine as much as Ukrainian firms need a way out; we are being asked to help with both.
HOUSE NEWS
Ben Wiselogle has joined Green Flag as Director, based in Kyiv. He spent six years in the US Navy with two deployments and eight at the State Department working strategic competition, sanctions, and applied intelligence; most recently he served in Ukraine's National Guard in Donbas as a combat medic and intelligence analyst. His job is to connect the units fielding new technology with the founders building it, on both sides of the border.
Nolan Dohnalek will be promoted to Partner. Martin Boldt-Christmas has joined as Venture Partner, and Stockholm is now our third office alongside Los Angeles and Kyiv.
LA Tech Week, 12 to 18 October. We are hosting "Your Defense Tech Unknown Unknowns Are Known in Ukraine." If you are in Los Angeles that week, reply for details. Justin is also on Reitler's "LA's Next Frontier: Defense, Space, and National Security" panel in Santa Monica on 13 October.
NOTABLE MEDIA
What we’re reading, listening to, and watching
Sebastian Junger wrote about his August visit to Kyiv
Junger (Tribe, The Perfect Storm) was in Kyiv for the 35th anniversary of independence, invited by the government to speak on national resilience, and wrote it up on his Substack. He starts with the international delegations under a tent by St. Sophia (no American representatives attended, he notes) and ends with an iron heart cut from steel plate and sealed in a block of ice, installed downtown by a military unit that uses art for cognitive defense. Ice that thick doesn't melt in a Kyiv winter; people put their hands on it, one by one, day by day, until it did. Junger's conclusion: a country that thinks like that will be hard to defeat. We agree.
Victor Rud's reply to The Economist's Melnichenko essay
Worth catching up on if you missed it over the summer. On 9 July The Economist ran a By Invitation essay by Andrey Melnichenko, a sanctioned russian industrialist, titled 'Why a broken Russia is bad for the world,' with companion editorial, a podcast, and video alongside it. On 27 July Victor Rud, chair of the Ukrainian American Bar Association's foreign affairs committee, answered with an open letter. His case: the mechanism is not falsehood but reframing. Invasion filed as instability; a reckoning filed as recklessness; sovereignty invoked on behalf of the state that spent a decade dismantling everyone else's. He places the episode in a long line of Western outlets carrying Moscow's frame, back to Walter Duranty, the New York Times correspondent who denied the Holodomor and whose Pulitzer the paper still holds.
Why it belongs here: the essay asks readers to value predictability over accountability. That is the frame under which an allocator prices Ukraine as a risk to be managed rather than a supplier to buy from. The argument is now circulating in the prestige press; better to have read it, and the reply, before someone repeats it across the table.
TRIVIA TIME
You made it to the end! Enjoy a little enrichment in your enclosure.
Which ONE of these was NOT invented in Ukraine or by a Ukrainian-born engineer?
The helicopter (Igor Sikorsky, Kyiv)
The first human kidney transplant (Yurii Voronyi, Kherson, 1933)
The kerosene lamp (Lviv, 1853)
Some of the earliest X-ray photographs (Ivan Puluj, 1896)
The first electric tram in the russian empire (Kyiv, 1892)
The Antonov An-225, the heaviest aircraft ever flown
The telephone
The first computer in continental Europe (MESM, Kyiv, 1950)
Answer: the telephone. The other seven trace to Ukraine or to engineers born there.
FROM KYIV WITH LOVE
Ground level perspective
On 24 August, Ukraine marked thirty-five years of restored independence, the fifth Independence Day of the full-scale war. There were no fireworks. There was a folk-art fair.
The weekend before, the Ivan Honchar Museum ran its fair as scheduled: craftspeople at tables, embroidery and ceramics changing hands, children underfoot. Across town at the Kyiv Fortress, a photo exhibition opened under the title 'My Homeland - Free Ukraine.' The president spoke at Sophia Square, where the state has marked its occasions for a thousand years. Then everyone went home before curfew.
Three days later the longest air-raid alerts of the war began. The photographs were already hanging.
Most of this issue is budgets, intercept rates, and contracts. This is what they are for: folding tables at a museum fair on a Saturday in August, priced in hryvnia, wrapped in newspaper, carried home.
→ EEAS
That's a wrap on September - if you're in Los Angeles for Tech Week, let Justin know!
— the GFV Team