In case you missed it, on Friday, SecDef Pete Hegseth met with his Baltic counterparts at the Pentagon, where the Estonian, Latvian, and Lithuanian defense leaders committed to spending 5% of GDP on defense by next year. Yes, next year, as in 2026.
Impressive, especially when you consider the rest of NATO isn’t on track to meet the lofty target until 2035.
But considering these states seem to be doubling down on defense—and especially considering their not-so-friendly neighbor—we thought we’d dive a bit deeper. What, exactly, are these Baltic states doing to beef up defense and defense innovation?
Estonia: In case your geography needs some brushing up, Estonia shares a 183-mile-long border with Russia and has long invested in defense as a result. (Wouldn’t you?)
The country:
- Joined NATO in 2004.
- Has committed to spending up to 5.4% of GDP on defense by 2029, up from about 3.4%.
- Has housed a NATO Enhanced Forward Presence (EFP) battalion since Russia invaded Crimea in 2014 (about 2,200 troops).
- Has provided about €500M ($584M) in military aid to Ukraine since 2022 (about 1.4% of the country’s GDP).
- Hosted Exercise Hedgehog 2025 in May with 16,000 troops from NATO allies testing rapid allied deployment in coordination with the Estonian military.
Estonia has a long tradition of digital innovation, including lots of startups and digitized state services, which have fed into defense. The country:
- Faced a massive cyber attack (reportedly orchestrated by Russia) in 2007. As a result, since 2008, the country has hosted NATO’s Cyber Defence Centre (CCDCOE) in Tallinn.
- Has also hosted a hub for NATO’s Defense Innovation Accelerator (NATO DIANA) since 2024.
- Has a €100 million DefenceTech Fund, managed by SmartCap. The aim is to grow the defense tech sector from ~€500M to €2B by 2030.
- Has committed €5M to innovation grants of up to €500K for companies building drones, EW, combat systems, situational awareness, munitions, and the like.
Some of the most successful defense tech companies to come out of the country include:
- Milrem Robotics: Founded in 2013, known for its unmanned ground vehicles (UGVs). The company’s tech has been deployed in Ukraine and Mali. The company has raised $6M to date, according to Pitchbook data, and is leading a €50M EU-wide project to standardize UGVs.
- DefSecIntel Solutions: Founded in 2018, building AI-enabled surveillance, autonomy, C2, and counter-drone software and hardware. The company’s tech has been deployed in Ukraine and on NATO exercises.
- Frankenburg Technologies: An Estonian-Latvian startup founded in 2024, building super-cheap anti-drone missile systems. The company has said its tech will be tested in Ukraine this year, and they’ve raised $4.3M to date, according to Pitchbook data.
- 5.0 Robotics: Founded in 2020, building mobile field-manufacturing systems for critical parts. The DefenceTech fund has invested in the company.
- Farsight Vision: A joint Ukrainian-Estonian venture founded in 2023, transforming UAV imagery into 2D/3D terrain models for battlefield planning. The company has raised $600K in seed funding from Darkstar (an Estonian-led coalition investing in defense tech).
Latvia: Latvia is nestled just under Estonia and shares a 176.2-mile border with Russia. The country:
- Also joined NATO in 2004 and has hosted a NATO Enhanced Forward Presence (EFP) battalion since 2014 (4,000 troops).
- Spends 3.65% of GDP on defense as of FY25. 42% of that is earmarked for capability development—air defense, vehicles, munitions, and the like.
- Has provided €892M in aid to Ukraine and signed a 10-year security agreement with the country in April 2024.
Latvia has also—like Estonia—committed to homegrown defense innovation. Seems to be a thing when you share a border with Russia.
- In March of this year, the country adopted the Defense Industry and Innovation Support Strategy, which boosts defense innovation funding to 1.5% of the budget by 2028, and 3% by 2036. It also calls for an increase in local supplier share in defense to 20% by 2028 and 100% by 2036.
- The strategy also calls for the establishment of a “Defense Innovation Fund” to invest in and build Latvian defense startups.
- The EU has allocated €7M as part of the European Defence Fund (EDF) to Latvian companies.
- The country’s National Defense University stood up a Defense Technology and Innovation Centre (DTIC) in 2021, which researches everything from 5G integration to dual-use systems.
Key defense tech companies include:
- Edge Autonomy: The massive international drone and surveillance optics company (based out of the US) has operated in Latvia for 15 years. In June, the company opened a new 10,000m² facility in Riga, the country’s capital, to produce drones and optics gimbals. According to Pitchbook data, the company as a whole is valued at $925M.
- Frankenburg: The Latvian-Estonian anti-drone missile company detailed above.
- Origin Robotics: Founded in 2022, specializing in drone-launched precision weapons systems and interceptor drones. The company has raised a $2.64M seed round and got a $4.8M grant from the EDF, according to Pitchbook data.
- Belss: An old-school comms integrator founded in 1998 that now specializes in integrating everything from UAV systems to secure communications for NATO and Latvian forces.
Lithuania: Last but not least, we’ve got Lithuania. The country is lucky enough not to share a border with mainland Russia, but it’s nice and cozy up against Kaliningrad Oblast (forgot that was there, huh?) The country maintains pretty icy relations with its much larger neighbor and has been vocal against the country, especially since the invasion of Ukraine in 2022.
Lithuania:
- Also joined NATO in 2004. What a year.
- Has committed to boosting FY25 defense spending to 5.5% of GDP from 2.8% in 2024. That’ll go up to 6% in the next five years.
- Also hosts 3,700 NATO troops as part of the Enhanced Forward Presence initiative since 2014.
- Has provided €769M in military aid to Ukraine and has been a vocal supporter of European military aid to the country.
- Is big on sovereign production. The country signed a €200M deal with Rheinmetall to establish a Baltic ammunition plant, which should open in 2026.
- Signed a MoU with Northrop Grumman in 2024, which also supports domestic munitions production.
And guess what, Lithuania is also bullish on defense tech.
- The country set up an initiative called MILInvest to back defense tech companies earlier this year, kicking things off with an initial €40M fund. Investments will be mostly early-stage and (importantly) don’t require companies to be dual-use.
- Last year, the country issued ten small (€30K) grants to companies to boost R&D aligned with military priorities.
- The European Investment Bank and EU more broadly have invested in defense innovation in the country.
- The country has tried to streamline both zoning and procurement legislation to make things easier for defense companies.
The country says it hosts over 80 defense tech startups, including a few notable ones:
- Granta Autonomy: Founded in 2015, the company builds AI-powered FPV quadcopters. In 2024, the company secured a €1M contract with the Lithuanian Armed Forces to deliver thousands of drones to Lithuania and Ukraine.
- RSI Europe: Founded in 2022 in response to Russia’s invasion of Ukraine, the company also builds FPV drones and remote explosive systems. The company delivered drones to Ukraine last year.
- Astrolight: Founded in 2019, the company builds secure space-to-ground laser communications. It was selected as one of NATO DIANA’s “top innovators” and has raised $3.27M in funding according to Pitchbook data.
- Unmanned Defense Systems (UDS): Founded in 2022 and backed by Lithuania’s Coinvest Capital, the company makes a whole range of drones, from FPV attack drones to loitering munitions to surveillance drones. The company has raised a total of $3.45M, according to Pitchbook data.
All three countries have also collaborated closely on regional security. In 2024, they broke ground on the “Baltic Defence Line,” which aims at securing NATO’s eastern front using everything from anti-tank ditches to concrete “dragon’s teeth.”
The US has also maintained a continuous rotational military presence in all three countries since the Russian invasion of Crimea in 2014.