VC Eric Slesinger: "People are finally questioning why in the world does Europe have 17 different battle tanks and the United States has one"
What's next for European defense autonomy?
There has been a massive influx of defense funding into Europe since Vladimir Putin’s war on Ukraine started in early 2022. A sea change is underway, with Germany loosening its debt brake and countries from Poland and the United Kingdom to the Baltics all resetting their expectations for defense this century. But after several years, it’s time to take a retrospective look and ask, “What’s next?”
To do that, I sat down with Eric Slesinger, general partner of 201 Ventures, an early-stage venture capital fund focused on advancing freedom and autonomy in Europe. He’s based in Madrid, and brings a deep local perspective on the future of the Old Continent and its new tech. We talk about the current defense tech situation in Europe, how EU countries are trying to band together around procurement, the history and future of gray-zone and multi-domain combat, and where Europe competes and even out-excels America in the defense world.
This conversation has been edited for length and clarity. For more of the conversation, please subscribe to the Riskgaming podcast.
Danny Crichton:
We’re in the middle of 2025. If you look back two, three years ago, it was a dead world. I’m thinking pre-Ukraine. Now, there’s been a huge shift toward defense investment. At the same time, it feels like we’re hitting the middle wall. A lot of investment has come in. A lot of American investors have shown up in the defense industry. But what’s next?
Eric Slesinger:
I think you’re right in the assessment that the boat is pointing into the wind right now.
In Europe, there’s a time lag. The exuberance of both founders and investors and government customers is phase shifted here in Europe a little bit later than in the United States. That plays out in really interesting ways. There are lessons learned from the United States that European founders are building into their companies. Things like being really early to hire government relations expertise rather than wait for the customer to come to you. And there are just fundamental differences. The main one being there’s not a single buyer here. You do not just buy from Ursula von der Leyen in Brussels. That’s not how it works.
Danny Crichton:
I was going to ask you about the buyer situation. On one hand, people always say the Pentagon is the only buyer in the United States. That’s both true and not. You have COCOMs, you have a lot of different buyers in the universe that is the Pentagon, yet there’s one set of rules that applies to everyone.
But in Europe, my understanding is that there’s not one set of rules, one set of demands. To me, that could either be a positive or negative. The positive being if you find a customer, even in a smaller nation, you can get that contract and get it done. On the flip side, you can’t get to scale as easily and therefore you need government relations much earlier than in the United States.
Eric Slesinger:
Yeah, exactly. Everyone’s different. The strategy you might take to win a program with the Navy in the UK is going to be very different from the strategy to win a program with the army in France, polar opposite probably.
There’s another strategy which Europe is particularly well suited for, which is to go after the tails. This is one approach a couple of companies I’ve seen are executing very well. The idea is you go after companies and ministries of defense that do not need to buy a Mercedes. They are very happy with the Toyota Hilux, and they’re going to use a bunch of them.
Danny Crichton:
Different companies obviously have different solutions, different products on the market. But I’m curious, from the perspective of finding a buyer, does everyone come to the same conclusions? These countries are at the top, these ones are at the bottom? Or do you see across your portfolio of companies that people really go all over the place?
Eric Slesinger:
There are a couple centers of gravity depending on the technology and depending on the time to development. On one end would be something like hypersonics, where Germany is an amazing place because you’ve got a lot of infrastructure for sounding rockets and static test fires and launch facilities and all of the downstream. And by the way, you have a German government that is very willing and excited to be the first funder of this type of technology. So that’s one side.
Then what’s emerged beyond that is different gravitational pulls to different regions for different things. For example, Nordics are attracting a lot of maritime activity and because of that, a lot of maritime companies. Denmark, Sweden, Norway, to some extent Finland are pulling in really great maritime founders and they’re using their countries’ natural resources to help these founders test way faster than they would otherwise.
Then you’ve got countries that I would categorize as access countries, those that others are looking toward to see what’s happening. The UK is a really good example. It’s a challenging environment, but even so, everyone is going after UK procurement because a lot of people are looking at what the UK is buying, and in Europe there are increasingly companies that are setting up R&D centers in areas south and west of London and hiring hundreds of people at each because there’s strong engineering talent that has been not well served by traditional UK companies.
France has its own ecosystem. It’s quite unique, always has been and I think probably always will be, in that the French will always champion French companies first. As an investor, that can create some issues when it comes to exit because your buyer set is going to be limited.
Then you’ve got a couple of countries that are laggards. Spain is really behind. Famously behind. Even though Spain would be an amazing place to test things like hypersonics — the interior is the most sparsely populated place in Europe and has good conditions for it. You can set up a wind tunnel there, and yet the Spanish government is more aligned with other countries than with many of its European allies.
Danny Crichton:
Centers of gravity seems to be the right way to think about it. No company, as far as I am concerned, is really pan-European. People focus on home bases, they focus on areas where the talent is located, where thousands of people were employed by defense companies and have been laid off. If you can take advantage of that talent, you already have built-in political support for building good companies.
I think the big question, then, is how do you think about balancing traditional warfare — where Europe has been superior to the rest of the world for hundreds of years — with all these new forms of warfare from autonomous drones to cyber security?
Eric Slesinger:
In my opinion, Europe is ground zero for where these new domains will be competed. You’ve covered gray-zone warfare on this podcast. Part of the thesis of the fund I run is specifically to study, identify, and try to invest within these gray zones. I am absolutely convinced that Europe is the site of some of the most serious gray-zone and hybrid competition and warfare for the next 10 to 20 years.
Europe is ground zero for where gray-zone warfare will be competed.
Even though Europe has been (on paper at least) somewhat cohesive in recent decades, there are long memories of competition. And that lets the other powers in this gray-zone competition — democracy on one side, authoritarianism on the other side — pull at the fabric to create holes they can exploit.
One of the areas I spent a lot of time looking at is the Arctic, and Europe is really well positioned to both understand and steward the Arctic into the next couple decades of competition.
Danny Crichton:
To me, the challenge is that there’s been no competition. Gray zone has not triggered the sense of, “Look, we need to dig ice tunnels, we’ve got to protect ourselves. If we don’t do this, we are going to fail,” which means we can’t have 20 years of permitting and investigations of walrus tusks in order to figure out whether this works. We just need to get it done. There’s not this sense of, at least from what I am seeing, “God, this is existential.” I mean, do you feel that that’s changing or is that just my American sense of lazy Europeans sauntering nude on the side of the Seine?
Eric Slesinger:
Here in Spain, where I live, they’re like, “Whoa, whoa, whoa, whoa, whoa. What happened to the welfare state? I thought the trade was that we’d get security and protection from our friends in the United States so we could therefore spend more on welfare and social programs and that kind of thing. Why are we going 180, let alone 90 degrees against that?”
I don’t know if this is reducing it too much, but as a kid who remembers 9/11 so vividly, I still do think that the United States’ collective trauma from all the events that preceded the global war on terror is a big part of the U.S. understanding of the current push with more global competition vis-a-vis China. Not forgetting obviously what’s happening today in Ukraine, what happened in the 1990s in the Balkans and other things, but think of countries like Spain, which hasn’t really seen much violence since the Spanish Civil War save for a couple of terrorist attacks in the early 2000s and in the north with ETA. This has led to Europe really questioning whether this is how they should spend their high taxes.
Here in Spain, they’re like, “Whoa, whoa, whoa. What happened to the welfare state? I thought the trade was that we’d get security and protection from our friends in the United States so we could therefore spend more on welfare and social programs.”
With that sorry state of affairs laid out, the reason I’m encouraged, at least, is the debt break being released in Germany, the stronger position of countries like Sweden that are finally saying, “Yeah, okay, forget this neutrality. We’re going to join Europe, we’re going to join NATO.”
For the first time in a long time, people are questioning why in the world does Europe have 17 different battle tanks and the United States has one. Why should we accept the fact that one 155 shell is not equivalent to another 155 shell? That’s crazy. That is being challenged.
We started this by asking whether we are in the doldrums after the initial pop. But we’re entering the phase of going from the smaller innovation contracts to the much larger programs of record. And while that transition happens, it’s going to feel slow, it’s going to feel stagnant. But what I’m seeing is that there are at least founders and companies being set up for success, and working really hard. And there are government customers on the opposite side of the table ready to get those larger contracts going.
Famous last words, but I think what we’re going to see in a couple of years is the fruits of the larger contracts. It’s going to challenge the European primes. It’s going to show the governments that are very used to dealing almost exclusively with national primes that there is another world. If you sit in Copenhagen or Stockholm, the idea of buying a solution from Berlin or from Warsaw is an exciting one, not a scary one.
Danny Crichton:
In some ways, I see a much more competitive market in Europe than in the United States. In the United States, we have five incumbent primes. They’re very expensive, they’re the Cadillac, they’re the Ferrari. And you have these new burgeoning companies that are trying to disrupt the incumbent or want to be the prime.
In Europe, you have Europe and European-periphery companies. I think of the Bayraktar TB2 drone that’s coming out of Turkey. The Turkish arms industry is doing very, very well and Turkey’s on the periphery of Europe. Then you have Hanwha in South Korea that has come in signing massive, massive deals. So billions of billions of Polish defense dollars going into South Korean hardware. There’s a mix of I think South Korean manufacturing and then Polish local manufacturing to finish it and bring it together. The price of these is so much more competitive than in the United States.
One of the points of optimism, then, is, yes, the budgets are smaller, but the Europeans understand that and they’re not having to incorporate welfare. The Pentagon’s budget is a trillion dollars of jobs welfare across 435 congressional districts in 50 states. In Europe, people are saying, “Look, we have a welfare state. We want to fund that directly. We don’t need the defense budget to fund a welfare state.” And so you have a little bit more focus on cost efficiency, trying to get the best bang for the buck.
You do not have to figure out what percentage of this defense contract is a jobs program. Jobs programs are already taken care of by jobs programs, and a defense program is just a defense program.
Eric Slesinger:
Yeah, Europe has unbundled it. You do not have to figure out what percentage of this defense contract is a jobs program. Jobs programs are already taken care of by jobs programs, and a defense program is just a defense program. That clarity is nice. I think there’s also a real pride in making exquisitely crafted engineering products for as few euros as possible. I don’t know if that comes from the high craftsmanship French luxury industry or from something else, but there’s real pride in it. With the focus on craft and value, you will be able to much more easily pick à la carte from Europe. Whereas in the United States, you have to do a prix fixe menu. I’m of the position that a lot of people want to buy à la carte.
Danny Crichton:
I always go back to the talent piece, too. We lost talent in the United States. We just don’t know how to build. My sense is Europe has more of those skills latent. They’ve been underutilized, and so it’s much easier to bounce back if people are still walking around with this in their minds versus not.
Eric Slesinger:
I fear a couple of things, though. So, one, the population is aging. It really is. Look at the Mittelstand in Germany and the people who are working in those facilities. It’s amazing work, but there is not the same regeneration of talent coming through the door from vocationals. It’s not nearly enough.
My other fear is that we do things like plant a whole new forest of oak trees hoping that in 200 years we’ve got enough tall old growth trees for new masts for ships, just like the French did in the late 1600s. And then all of a sudden there’s steel and you don’t need the trees. Europe, I think, in some ways falls into this trap where it’s got the ability to be a collective force, but maybe not the same willingness to think about what things are going to be like by the time the resources come to fruition.
Danny Crichton:
You’ve been very obsessed with forests recently, but I get what you’re saying, which to me is a question of multi-domain. I think less of, are tanks going to fundamentally change? But I worry more about will tanks even matter in a world of autonomous warfare and drones that have amazing motors and ridiculous ranges?
Eric Slesinger:
That’s my fear, too. And I do stay up thinking about trees, by the way.
I’m an avid woodworker, I have a love for trees. But the analogy is thinking about whether we are investing and spending a lot on a technology that is going to completely be wiped out by just a change of doctrine? And that doctrine, I think, is being rewritten on a daily basis based on advances in artificial intelligence. I am really interested in seeing what doctrine is going to look like in 15 to 20 years once we really have our hands around AGI, once we have our hands around what it looks like to simulate a war before it’s fought much more accurately. I think it’s going to change doctrine around diplomacy, I think it’s going to change doctrine around what it means to have a war fighting force in a country with fewer people.
Danny Crichton:
That’s what we try to do with a lot of the Riskgaming stuff: There are new technologies coming together. Everything could change, nothing could change. It’s not obvious.
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