Estonia Opens a Three-Year Military Channel to Archangel

The Estonian Defence Forces signed a three-year defence tech partnership with Archangel, a €50 million Estonia-UK fund, at Tallinn’s Baltic defence conference.

Major Ivo Peets, commander of the Force Transformation Command, and Nicholas Nelson, Archangel’s founder and managing partner, signed on 22 and 23 September 2026. The pact covers information exchange, introductions across the Baltic defence sector, and tests in Estonia where the force finds them useful.

Estonia Hands a Young Fund a Military Channel

Archangel is a €50 million early-stage vehicle, founded in 2025 and based between Estonia and the United Kingdom. It backs defence-first founders at pre-seed, seed and Series A, and it lists autonomous systems, battlefield software, AI and secure operational infrastructure as its hunting ground.

The fund posted a three-year cooperation agreement note the day the signatures landed. Nelson’s own test for a defence-first company is blunt: more than 50% of current or projected revenue should come from ministries or primes. Firms that treat a ministry sale as a rebrand, a habit he has called “defence washing,” usually fail the user, not the code.

That is the job this pact actually does. Peets’s command will put military need on the table, Archangel will bring companies and capital, and testing in Estonia is allowed where the Defence Forces say it fits.

Cooperation between the Defence Forces and the defence industry helps us build a shared understanding of needs, technology and opportunities. We welcome the opportunity to work with Archangel and to strengthen the links between innovation, investment and the development of defence capabilities.

Major Ivo Peets, Commander, Force Transformation Command, at the ABCD signing

The wording is polite. The structure is a three-year pipe between a force-design command and a private fund that already holds British, German, Baltic and UK-Ukrainian names.

The Command Built to Close Capability Gaps

The Force Transformation Command reports directly to the Commander of the Defence Forces. Its published task is to close identified gaps at a pace the rest of the force can absorb, from the definition of a need through to kit that has been tested.

Peets took the post on 1 June 2025. He holds a 2025 PhD from Tallinn University on defence planning for small states, completed further study at the Naval Postgraduate School in the United States, and has more than 20 years in uniform, including NATO’s ISAF mission in Afghanistan and the European Union training mission in Mali.

On the command’s own page he puts the work in plain terms, saying innovation often means using knowledge, kit and practice Estonia already has, rather than starting from a blank sheet. Deputy commander Major Janar Pekarev holds the innovation brief. The command also sits among the Defence Forces, industry, research houses and foreign partners, which is the network a young fund wants to join.

A military that spends at this scale still needs a door that can say no early. Peets has previously called for a one-door path so firms hear quickly whether a tool has a real fight to join. The Archangel pact is one such door, run through a fund rather than an open call.

€50 Million Against a €2.4 Billion Budget

Estonia’s 2026 defence spend is set at 5.4% of gross domestic product, with the cash total up 42% from €1.7 billion to €2.4 billion. More than half of that budget, €1.27 billion, is tagged for orders, including VAT.

THE 2026 BUDGET BESIDE A €50 MILLION FUND

The Ministry of Defence 5.4% of gross domestic product plan also funds extra HIMARS launchers or equivalents and the first IRIS-T medium-range air defence deliveries in 2026. Operating costs rise 35%, or €408.8 million, and investment spending rises 54%, or €290.2 million. Spend stays at no less than 5% of GDP from 2027 to 2029.

The entire Archangel fund is in the same band as a single year’s park works. It is a rounding error next to the ammunition line. Tallinn did not need a venture firm to buy rockets. It needed a scout that can talk to founders and to the staff who write requirements.

Why Archangel Sat Down in Tallinn

Superangel, the Tallinn firm founded in 2018 by Veljo Otsason and Rain Rannu, incubated the fund. Archangel is not a London visitor asking for a tour. It is a defence-only vehicle grown out of a Baltic partnership and staffed by people who sell themselves on frontline knowledge.

Nelson spent nearly two decades across defence, intelligence and venture work, founded a European defence syndicate, and later partnered at MD One. He teaches at Georgia Tech, is a senior fellow at the Center for European Policy Analysis, and is a fellow of the Royal Aeronautical Society.

Daniel Carew, his partner, comes from deep-tech investing with a DARPA-style brief. The team claims more than 50 years of combined defence industry time in the United Kingdom, Estonia, the United States and wider Europe.

Archangel was founded to support the development of Europe’s defence technology ecosystem. Working closely with the Defence Forces helps us better understand the needs of users and support companies as they develop and scale.

Nicholas Nelson, Founder and Managing Partner, Archangel

Early access to users, he has said, is the filter that decides whether a defence startup lives. You also need to know how buying works and how long integration takes. The three-year channel puts Archangel next to the staff who write those user needs for Estonia, which is a harder filter than a dual-use slide.

Kraken, Labrys and a UK-Ukrainian AI Lab

The fund’s published book already looks like a map of the problems a Baltic force actually has, from uncrewed boats to software that has to work when the network does not.

WHAT ARCHANGEL ALREADY BACKS

• Kraken Technology Group: Uncrewed maritime systems, with Archangel also listing a joint venture with NVL and a NATO Innovation Fund cheque among later headlines.
• Labrys Technologies: The Axiom platform, used to verify, coordinate and pay distributed teams in hard places.
• Project Q: A German firm building an Internet of Defence platform.
• LYSK: Software for hostile environments, from the tactical level to the strategic one.
• UK-Ukrainian Offset Labs: An AI lab writing models for defence and national security.
• Sky Spy: Defence-focused technology, grouped with the same early book.

Those names already span uncrewed maritime craft, software for hostile ground, and a UK-Ukrainian AI lab. The Baltic deal lets the fund walk that book into an Estonian test conversation instead of pitching cold.

Defence Week Put the Pact on Stage

They signed at the 20th Annual Baltic Conference on Defence, hosted by the International Centre for Defence and Security and the Ministry of Defence at Kultuurikatel. Prime Minister Kristen Michal opened the meeting by saying Russia has not changed its aims, and that over the next ten years Estonia will put 26 billion euros in national defence.

He also said defence industry turnover has grown by an average of 44% a year over the last three years, and that future fights will be won by learning faster, making more, and doing it cheaper. ICDS put attendance above 500. Estonian Defence Week, which wraps the conference, runs from 21 to 25 September and was billed at 4,000 specialists.

ESTONIAN DEFENCE WEEK IN TALLINN

1. 21 September 2026: Defence Innovation Day opens the week, run by Tehnopol through the NATO DIANA Estonian accelerator.
2. 22 September 2026: The Estonian Defence Industry Symposium and the first day of ABCD; Michal gives the opening speech.
3. 22 and 23 September 2026: Peets and Nelson sign the Archangel pact on the ABCD floor at Kultuurikatel.
4. 24 September 2026: NATO’s open innovation gathering sits on the same week’s calendar, with the city hackathon running through 25 September.

The same week a Finnish defence AI firm, NestAI, used the industry symposium to confirm a larger Tallinn office after a June letter of intent with the Defence Forces and Finland’s ministry. The Archangel signature sits in a cluster of user-access moves, not on an empty calendar.

What Three Years of Testing Can Buy

The Ministry of Defence has already put cash against the physical side of that promise. Beside the Archangel meetings sits a state test-and-build stack that does not depend on a venture cheque.

MONEY FOR PARKS, TESTS AND LABS

• Park works: €38.2 million in 2026 for core infrastructure of the defence industry park.
• Product tests: €3.8 million so 8 to 10 new products can be developed and tested each year.
• Research line: €2 million set aside for research and development.
• Drone lab: Metrosert, the national metrology centre, has described a €7 million drone test lab in Haabersti, funded by the government and a Nordic Investment Bank loan, with opening aimed at 2027.

The upside for Archangel is faster entry to those test slots and a private look at Baltic deal flow. Estonia still has the park, the lab and the €2.4 billion budget even if the meetings stay polite.

The agreement runs until 2029. Tests happen where the Defence Forces judge them appropriate. The command that signed it exists to turn those tests into kit the force can actually field.