Heightened geopolitical uncertainty and dramatic increases in defence spending are reshaping global capital allocation. Alongside governments, venture capital is playing an increasingly important role in funding next-generation defence and dual-use technologies, including AI, cyber, space and advanced systems.

In the recent Guernsey Finance Sector Growth Strategy 2035 report by Oliver Wyman, it highlighted a structural shift: defence is no longer solely a public sector domain but an emerging engine for innovation, productivity and economic resilience. Crucially, this shift depends on the efficient mobilisation of private capital through institutional level fund structures.

This is driving demand for jurisdictions that can accommodate complexity with balancing investor protection, regulatory credibility and speed of execution. In this context, Guernsey is particularly well positioned.

Structural Demand for Specialist Fund Platforms

The evolution of defence investing especially in dual-use technologies has increased the relevance of closed-ended private market structures. These strategies require flexible vehicles capable of supporting long investment horizons, cross-border capital flows and co-investment alongside government and strategic partners.

Official defence financing guidelines and Government recommendations emphasises the role of structured funds in bridging public-private capital gaps, particularly where governance, transparency and alignment mechanisms are critical. This aligns closely with Guernsey’s established capabilities in private equity and venture capital structuring.

Guernsey’s positioning is not incidental. The recent Finance Sector Growth Strategy which was developed with input from industry and supported by the States of Guernsey, the GFSC, Guernsey Finance and the Guernsey International Business Association, explicitly identifies emerging sectors including defence and security as priority areas for growth.

Importantly, Guernsey’s regulatory model is principles-based and proportionate, enabling innovation while maintaining adherence to international standards. This is a key consideration for defence funds, where regulatory scrutiny, sanctions, compliance and investor transparency are heightened.

Execution Advantages: Speed, Expertise and Stability

From an operational perspective, Guernsey offers several structural advantages:

• Speed to market: Streamlined authorisation processes and structures such as the Private Investment Fund (PIF), enabling speed which is critical in competitive venture environments;
• Technical expertise: A mature ecosystem of administrators, legal advisers and non-executive directors with deep alternatives experience;
• Regulatory credibility: A well-regarded framework that supports complex strategies with a proportioned approach; and
• Political and economic stability: A consistent, stable island and economy with an established Government infrastructure.

Governance and Manager Selection

Defence-focused funds introduce additional layers of complexity, including ESG considerations, ethical screening, export controls and sanctions regimes. As such, jurisdictional credibility and governance standards are paramount.

Guernsey’s emphasis on substance, oversight and board-level expertise supports this requirement. However, the continued development of this segment will depend on attracting high-quality managers with demonstrable experience in defence and deep tech investing.

The jurisdiction’s ability to combine flexibility with robust governance will be central to maintaining investor confidence and regulatory alignment.

The convergence of geopolitical risk, technological innovation and private capital is accelerating the development of defence-focused investment strategies. Unlocking this opportunity requires jurisdictions capable of supporting sophisticated, well-governed fund structures.

With a proven track record in alternatives, Guernsey is well positioned to act as a domicile of choice.

For managers operating at the forefront of defence, technology and private capital, Guernsey offers a combination of agility, expertise and regulatory integrity that is difficult to replicate.