Debate Article: When Innovation Costs a Million, Small Defence Companies Risk Being Excluded

This is an opinion piece, and the author is solely responsible for the views expressed in the text. NDS has previously published a news article about Battle Innovation Week. NDS is a platform for qualified voices within the defence sector. It provides space for different perspectives on issues related to defence, security, and industry. Do you have a perspective that should be highlighted? Contact the editorial team: news@nordicdefencesector.com.

The government has been clear: Swedish defence innovation must increase. New companies need to contribute to defence capability, and the innovation base needs to be broadened. In a security situation where technology is developing very rapidly, often by smaller and more agile companies, this is crucial for our national defence capability, and where new solutions often arise in smaller and more nimble firms.

But the question is whether we now risk building an innovation system that, in practice, excludes the very companies we claim to want to protect? Having to pay for access to state innovation arenas only benefits established players.

This week, the Swedish Defence Materiel Administration (FMV) launched the initiative Battle Innovation Week. Participation in Battle Innovation Week will, however, cost up to one million Swedish kronor. For smaller technology companies and startups, which typically allocate their resources to development, prototypes, and engineers, this is a significant investment.

In practice, participation risks being limited to already established players. While these also play an important role, it is often the smaller companies that drive technological development in areas such as software, autonomous systems, sensors, and drone technology.

The government's ambition has been to open the system to more actors. If participation in central state innovation initiatives costs up to one million kronor, the effect risks being the opposite.

Another issue concerns the pace. Battle Innovation Week is currently planned to take place once in 2026. The initiative was announced as early as autumn 2025, which makes the likelihood of more opportunities during the current year appear limited.

In a situation where Europe may face a serious military threat within a few years, this is a very low pace of innovation. The coming year is crucial if new solutions are to be developed, tested, and converted into operational capability.

If Sweden is serious about accelerating defence innovation, the ambition should be significantly higher. Innovation rarely works well in a model where experiments and tests occur at a few isolated instances. It needs to be recurring, broad, and continuous.

A more reasonable model would be, for example, several innovation windows per year where different technical areas and capabilities can be tested together with units and authorities.

Innovation often arises at the intersection of different technical fields and actors, and therefore the environments need to be open rather than narrowly defined.

Equally important is keeping the barriers low. If Sweden wants to build a broad innovation base, more companies must be able to participate. Today, the situation is often the opposite. Small companies lack the established relationships within the system that larger companies have, and they often also lack the resources to participate in costly innovation initiatives.

For Battle Innovation Week, companies can apply for funding through Vinnova. But this raises questions. If participation must be financed through additional state support programmes, it effectively means that small companies must first spend time and resources on applications and administration while the funding ultimately still comes from the same state budget.

The argument for participation fees has been that the authority risks favouring individual companies with taxpayer money otherwise. But if participation is effectively financed through other state innovation programmes, the difference becomes merely administrative (and bureaucratic).

Is this really the most effective model in a security situation where the speed of developing new solutions can be crucial? It is not unreasonable in such a situation to interpret the regulations in a way that can more highly prioritise rapid innovation and broader participation.

There are therefore reasons to consider how the innovation model develops. Some principles should be guiding:

• More recurring innovation windows each year

• Broader technical perspectives and less detailed control

• Low economic barriers for participation

• Clearer connection between experiments, units, and operational use (very important!)

Battle Innovation Week is fundamentally a good initiative. Sweden needs more environments where new solutions can be tested and demonstrated. But if the ambition is to broaden the innovation base, the design must also support this.

Otherwise, the result risks being that the same established players continue to dominate the innovation arenas, while many of the most innovative companies remain outside.

Sweden has good conditions to be at the forefront of defence innovation. But this requires that the systems we build actually open the door for more ideas and more companies.

Accelerating defence innovation is not just about new initiatives. It is about how these initiatives are designed in practice.

Sebastian Merlöv, CEO and co-founder of Sweden Dynamics

Entrepreneur and business leader for startups and scale-ups since 1995

Reservist Corporal 32. Intelligence Battalion