Challenges and Commercialization Pathways for Startups in the Swedish Defence Industry A descriptive case study on the defence landscape

Sammanfattning

The Swedish defence industry is undergoing change as a result of geopolitical uncertainty, increased defence spending and the NATO-membership. Additionally, ongoing conflicts such as Russia’s invasion of Ukraine showcase the use of innovation andnew tactics in modern warfare. The Swedish authorities have expressed the need fordefence innovation and that startups play a crucial role in developing innovation.Despite this, startups face multiple challenges when attempting to commercializein the defence industry. This thesis explores challenges related to five dimensions:value and customer need, funding, commercialization pathways, innovation and system integration, and regulation and permits. This is explored through a qualitative,descriptive case-study approach and by conducting interviews with startups, established organizations, authorities and other relevant stakeholders. Additionally,secondary data is gathered through a literature review which is used to explain andanalyze the empirical data. The study suggests that adopting a dual-use strategyhas the potential of addressing challenges related to all dimensions but may introduce regulatory complexity. Furthermore, four key methods of addressing theidentified challenges are presented, namely: iterative stakeholder mapping, definingand narrowing the value proposition to signal value, validating the solution throughdifferent tests, and choosing a suitable commercialization path based on validationopportunity and access to complementary assets. Additionally, the authors proposethat startups develop an early prototype to signal capability. Challenges relatedto funding, regulation and permits are not explored as extensively as the others.Nonetheless, the thesis suggests that startups should balance an ambitious narrative with realism as well as build early awareness regarding regulatory aspects and permits. The thesis contributes by providing an overview of the challenges thatstartups face and proposing methods to address the identified challenges.