In DefTech and cybersecurity, the arrival of foreign capital confronts sell-sides with growing tension: rapid scaling versus preserving national control. The IEF review, led by the French Treasury and Ministry of Defence, turns this tension into a structural deal variable.
A sovereign narrative with a double edge
The sovereign positioning has allowed defence and cybersecurity companies to obtain public contracts early and strong legitimacy with sensitive clients. It is a powerful commercial asset, but also generates strong political expectations.
Any significant foreign capital inflow is perceived as a dilution of sovereignty and automatically triggers an enhanced IEF review. The narrative that built commercial value thus becomes a regulatory constraint to anticipate from the preparation phase.
The State as a structural and non-negotiable deal actor
IEF is mandatory for dual-use technologies, and the Ministry of Defence is systematically consulted. The Treasury already imposes clear conditions: maintaining French majority ownership and involving Bpifrance. This process creates temporal uncertainty and may force a restructuring of the round.
Sell-side interests are also asymmetric. Founders must arbitrate between personal wealth, strategic control and preserving the sovereign mission. Historical investors seek liquidity and upside while protecting their influence. The arrival of a US growth fund amplifies tension between the need for rapid scaling and preserving control.
Hybrid structures and early preparation
Emerging solutions rely on arrangements designed as deal design variables, not emergency responses. Involving Bpifrance as co-lead or anchor from the structuring phase mechanically secures French majority ownership, facilitates IEF approval and sends a positive signal to foreign funds.
It is also necessary to provide protective governance mechanisms (veto rights on strategic matters, French majority on the board, restricted national security committee...) and to structure secondaries or partial liquidity mechanisms to align sell-side interests without diluting French control.
Finally, preparing a dedicated sovereignty document for the State and foreign investors turns the regulatory constraint into a competitive advantage. Rounds that fail to anticipate these constraints suffer delays, renegotiations or failures.
Key takeaway
Sovereignty is not an external risk to manage in a hurry, but a deal design variable to integrate from the preparation phase.
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