If there is one fund that knows how to deploy big-time cash into tech companies, it’s Bessemer Venture Partners. The Silicon Valley fund has about $19B under management, and has invested in tech giants from LinkedIn (everyone’s fav) to Shopify.
This year, the fund has turned to defense—specifically, European defense. They led Auterion’s $130M Series B in September, and told Sifted in October that there is “no limit” on how much they’ll spend on European defense tech. (In real terms, they said that they plan to deploy about $1B on everything from manufacturing to drones.)
Alex Ferrara–a partner at the fund who’s been on the team since 2005–is leading Bessemer’s European charge from London. Last week, we sat down with Alex to chat about what he’s excited about, why the move into Europe, and what, if anything, keeps him up at night.
Tectonic Defense: Tell me about Bessemer.
Alex Ferrara: Sure. We are a global venture capital firm. We’ve got about $19 billion of capital under management, investing out of an early-stage venture fund that’s just shy of $4 billion in aggregate. We’re global, but most of our teams are in California. We have offices in San Francisco and Redwood City, and a good number of people in New York and Boston. I’m based in London. We have eight people here, and then offices in Israel and India as well.
Tell me a little bit about your background.
Sure. I studied electrical engineering as an undergrad at the University of Pennsylvania, and then I started my career as a software engineer. I was a Java and C++ developer for many years, working on Wall Street and then at dot-com companies.
After the dot-com bubble burst, I found my way into venture in 2005, when I joined Bessemer as an associate. I always thought I would do it for a couple of years and then jump into a company. As I had been a VP of engineering at a startup, I thought I’d jump back in as a head of engineering.
We kept growing as a firm, and I stayed for 20 years. At Bessemer, I was in the US for many years, out of the New York office. I invested heavily in cloud and vertical application software. The most notable investment I’ve made is leading the Series A of Shopify around 2010.
I moved my family to London four years ago to open our Europe office because I was spending a lot of time investing in European companies, and I just felt that the European ecosystem was really starting to explode. We focus on investing at the Series A stage, at early-stage inception, or in first- or second-check rounds. We felt that, to continue doing that, we needed a presence here so we could meet founders face to face.
Tell me a little bit more about Bessemer’s push into Europe. Why this moment? Why right now? Why are you leading this charge?
There’s a narrative that you read about that’s fairly negative about Europe. But I made my first investment here in 2006, and I remember coming to London back then; there really wasn’t much of a tech ecosystem. I’ve watched it grow really dramatically over the last 20 years.
I spent ten years flying over, investing in early-stage companies like Pipedrive in Estonia, Wandera out of London, and TeamViewer out of Germany. I just saw that, year over year, more and more exciting startups are emerging, and we moved over because we wanted to invest at the earliest stage.
We’ve also seen a growing number of venture firms, and we’re now seeing the second and third waves of founders who started their careers at successful companies—the Spotifys, the Revoluts—and are now leaving those companies to start their own. They’ve seen what great looks like, and now they’re starting new companies after that first experience. That’s what’s gotten us really excited; we’re seeing these companies emerge and sell into the global market.
Can you tell me specifically about Bessemer’s interest in defense? What is your thesis in thinking about defense tech and deep tech companies?
We’ve been active investors in defense tech in the US for more than a decade. We started with a focus on space tech, which we consider a very important part of defense tech. We were early investors in companies like RocketLab and Skybox Imaging, a CubeSat company that Google acquired. My partner, David Cowan, invested in both of those.
More recently, we’ve invested in companies like TurbineOne, which brings AI to the edge in air-gapped environments such as Navy submarines, and Bastille, which provides software-defined radio signal detection for physical data centers.
Then, we started to see the NATO commitment, which was one of the first indications that real dollars were starting to flow into defense tech across Europe. The nature of procurement really seemed to be changing, too. As in the US, ministries of defense can now procure software and hardware more flexibly. You didn’t need a massive program of record anymore; they were willing to work with startups rather than just the primes.
And then, perhaps the biggest shift came with the war in Ukraine. The nature of warfare has changed with the rise of military drones—very low-cost drones able to take out high-value targets. You might have a $20,000 or $30,000 drone capable of destroying a much more expensive tank or radar system. That creates an economic asymmetry in which low-cost drones can cause outsized damage, and if you’re on the wrong side of it, it can be devastating.
There’s been a scramble as governments have realized this.
Many are now investing heavily in these technologies, and a lot of that has been driven by advances in AI—the ability to form drone swarms, conduct sophisticated targeting, and make software-defined systems more autonomous. Many of the AI innovations from the commercial sector have now made their way into defense, and that’s exciting because it’s creating disruption and opportunity for new companies to emerge.
What’s the unique value-add that Bessemer has for the European defense tech scene and for helping to scale these companies?
We’ve got a really good roster of people who can connect with departments across the US government. Because we’ve been investing in defense tech in the US for so long, we’ve helped several European companies make introductions and navigate that landscape.
The budgets in Europe, post-NATO commitment, are projected to be massive—NATO countries moving toward 5% of GDP in defense and critical infrastructure. Even so, the US market remains larger and less fragmented, which has been compelling for the founders we talk to.
We also help in the traditional ways venture firms do: hiring, introductions, scaling. For instance, we’ve been working with Auterion, a drone company expanding in the US, helping them build out their American team.
And finally, many venture firms can’t invest in defense tech at all due to LP restrictions. We can. We’ve done it before. That gives founders confidence that when they pitch us, they’re not wasting their time.
Can you tell me a little bit about this move for companies from Europe to the US?
I think we often get too hung up on geography. What’s really needed to be successful—especially when it comes to Ukraine and defending our way of life in the West—is cooperation. Cooperation between Western Europe and the US, between large primes and startups.
As more successful companies scale, they’ll have offices across multiple geographies. They’ll need a presence in both R&D and go-to-market across those regions. So I don’t think the days of a “local champion” from France, Germany, or the UK who serves only their domestic market make much sense. The best companies will benefit from cross-pollination of talent that comes with having teams in multiple locations and building those relationships.
Tell me a little bit about your investment thesis in Europe.
We think of it as “European Resilience” because it’s broader than just defense tech. It includes defense, space, and advanced manufacturing.
Within defense tech, we’ve invested in Auterion, which provides an operating system for drones and applications that enable swarm capabilities and terminal guidance in GPS-denied environments. We also see significant opportunities in command-and-control software and in aerial defense—protecting both national borders and critical infrastructure from drone incursions.
In space, we believe sovereignty is essential to national security. As countries build constellations of satellites for communications, mapping, and military use, there’s a growing need for investment to maintain and protect those constellations.
And then there’s advanced manufacturing and rare earths. Western Europe and the US have fallen behind China, but the gap isn’t insurmountable. With modern manufacturing, additive and CNC production, and the application of AI, we can catch up and even surpass it.
Rare earths are critical, too. China produces over 90% of the world’s magnets, though only about half the raw materials are mined there. Thirty years ago, the US led in this space. There’s a real opportunity now for Western economies to rebuild that capability—to mine, refine, process, and manufacture magnets used in everything from consumer electronics to military systems. That’s a key pain point we’re focused on.
What do you think are the threats, obstacles, or challenges unique to Europe that you might not see in the US?
Aerial defense is one of them. A number of companies are deploying various technologies to protect country borders and critical infrastructure from drone incursions. Some are using drone interceptors or lower-cost missiles—you don’t want to use a million-dollar Patriot missile to take out a $50,000 drone. We’ve also seen advances in high-power microwave technologies, similar to what Israel deployed recently.
That’s a problem unique to Europe. The US is separated by two oceans and thousands of miles from Moscow, so it’s not as pressing an issue there. But in Central and Eastern Europe—Poland, Romania, Denmark, Germany—we’ve seen real drone incursions. It’s become a major focus area. That’s a clear example of a uniquely European problem that European tech companies are well-positioned to solve.
Something I’ve observed is a difference in perception of the threat from China in Europe versus the US. How do you think that’s perceived differently here, both in the UK and continental Europe?
Having lived in the US for many years and now in London for the last four or five, I think, in the US, it’s a much more top-of-mind threat. The US currently has some of the most advanced companies in transformative areas of technology—especially in AI. The leading foundation models are OpenAI and Anthropic, both in the US. Those companies are competing with each other, but they’re also competing with China.
In the UK and Europe, we don’t yet have that same scale of foundation model companies. There are some great ones, like Mistral, but their size is dwarfed by those in the US. It’s a little more front-of-mind for the US because that’s where the leading innovators are—looking at the global competitive landscape and seeing China as their primary challenger.
Considering the whole ecosystem and your view of the defense tech world in both the US and Europe, is there anything you think the European market is getting wrong right now?
There needs to be more cooperation across the EU—between countries, between defense ministries, and between primes and startups. We are seeing progress there, but more collaboration will be crucial.
The other thing I hear sometimes is this narrative about startups “disrupting the primes.” I don’t think that makes sense. The only thing these startups should be disrupting is the enemy. They should be working with primes, not against them.
Take our portfolio company Auterion—their goal isn’t to disrupt primes; it’s to enable them. The pie is big enough for both. Incumbent primes have done extremely well—Rheinmetall’s stock price has gone up more than twentyfold in the last few years—and there’s room for a new generation of “neo-primes” to succeed alongside them. This isn’t a zero-sum game; the pie has grown, and there’s opportunity for both.
In a similar thread, we’ve seen many American companies making pushes into Europe—opening offices and competing for contracts. Some people worry that these Americans might grab a big piece of the pie. What’s your take?
I think it’s a good thing. There should be competition and a bit of healthy anxiety among European players. Many European defense companies are playing to their strengths—precision engineering, advanced manufacturing—and that’s powerful.
US companies are also building presence and manufacturing capability here, which is good for jobs and investment. Sure, there’s tension that comes with competition, but that’s how you get the best solutions for warfighters.
And unlike the early internet wave, this isn’t winner-take-all. There will be multiple winners in each category. We’re already seeing that.
What do you think Europe has as a unique advantage?
Engineering and manufacturing depth. The talent pool is incredibly strong. There’s also proximity to the problem—especially in Central and Eastern Europe. Companies close to Ukraine can test and iterate their technology at a pace that would be much harder in the US. That feedback loop is invaluable.
What are you most excited by? What do you think Europe is better at building than anyone else?
Auterion really excites me—the autonomous drone capabilities. We’re heading into a future that’s increasingly software- and AI-defined, where fleets of low-cost drones are manufactured using commodity hardware.
Historically, venture investors shied away from hardware because software was easier to scale. But what’s changed is that much of the sophistication now sits in software, not in the hardware itself. Instead of a single half-million-dollar drone, we’re seeing swarms of affordable ones—additively manufactured, 3D-printed, fast to produce.
It’s now about simple hardware with complex, intelligent software. That’s far more attractive to venture investors and far more scalable for defense. You get this “many-to-one” leverage—one operator can command twenty or a hundred drones. That kind of autonomy completely changes the warfighter’s responsiveness on the battlefield.
Let’s talk about the path to exit. Many people worry about the profitability of hardware-heavy defense startups. Do you see a viable path to exit or scale here, both in the US and Europe?
There’s definitely more risk than in traditional enterprise cloud businesses, where you have decades of comparable IPOs and M&A data. But you’ve also got large primes with huge market caps—Rheinmetall, BAE, Saab, and others—that are active acquirers.
The exit landscape has evolved—it’s not just IPO or acquisition anymore. There are secondary markets, where later-stage investors provide liquidity to early founders and employees—like we’ve seen at Revolut and Stripe. We’ll start to see that in defense tech, too.
Private equity has also entered the market, unlike 20 years ago. That opens another exit path. And primes will continue to acquire where they lack capabilities.
So yes, it’s riskier, but there are multiple viable exits now. And some companies are already generating strong revenues and profits—particularly in drones—so independence is another option.
Are we in a bubble? Maybe. There’s definitely a lot of capital chasing the category, especially after Ukraine. But it’s demand-driven. Some sub-areas, like drones, do have bubble characteristics, which is partly why we invested in Auterion—it’s a platform play that enables the ecosystem rather than competing with it directly.
So yes, we could be in bubble territory, but it’s hard to say with certainty.
How has your job changed in the past year, since the start of the second Trump administration, with the shift in transatlantic relations?
I think over the last year, we’ve seen a real wake-up call across Europe that wasn’t there before. There’s now a much clearer realization that Europe needs to focus on resolving the war in Ukraine and protecting its own national interests.
Trump’s pullback on US commitments was a shock, but in a way, it’s been galvanizing. It’s prompted governments and defense ministries to take this seriously—to mobilize resources and consider how to cooperate more cohesively in confronting the threat from Russia, and perhaps China over time.
And finally—what keeps you up at night?
Good question. Honestly, I think most of these technologies are ultimately for the best. Combat is one job we’d all like to see replaced by robots, right? If drones or autonomous systems can save lives, that’s a good thing.
But when you see these systems in action—the speed, the force—it’s humbling. You realize how powerful they’ve become, how fast the world is changing. I think a lot about making sure we’re on the right side of that technological curve—ensuring that the Western world stays ahead, ethically and strategically.
That’s what keeps me up. Making sure we stay on the right side of this economic and technological asymmetry, and protect our way of life.