Defence has received more than 25 co-investment proposals in the three months since the Advanced Capabilities Investment Fund (ACIF) was launched, demonstrating broad support for the new financing model. Designed to boost the domestic defence industry, the ACI Fund offers co-contributions of up to $500m to encourage private sector investment in defence and in dual-use exports and the advanced capabilities of the future.
“I meet regularly with both private capital, private equity, and banks, and there’s no shortage of people interested in investing in the sector,” said Defence Industry Minister Pat Conroy, adding that access to capital can be a barrier for smaller businesses at the leading edge of innovation.
The co-investments in Australian small to medium-sized businesses will target the fields of cyber, AI and autonomy, electronic warfare, quantum technologies and undersea warfare.
“We also need to be innovative, and this is about growing the Australian defence industry, getting greater scale, moving faster, and overcoming that barrier to capital,” Conroy added.
A new financing instrument for defence and the private sector to explore, the fund has the potential to boost exports in the defence sphere, said Australian Industry Group CEO Innes Willox.
International conflicts in Ukraine and the Middle East, have demonstrated the need for a strong connection between government and the private sector to deliver the capabilities needed by defence forces as warfare evolves, he added. The fund is intended deliver that connection.
“We think it’s got real potential because it will open up defence more to the private sector in investment and collaboration,” Willox said. “It will potentially help Australian defence companies, or those working in defence, globalise their operations and move up the value chain.”
Lack of scale has often been an issue for Australian defence companies, hampering their ability to compete globally, get into global supply chains, and forge international partnerships, Willox added.
The fund could potentially help the private sector overcome that hurdle. “This strategy is heading in the right direction,” he said. “It’s going to take time for it to work through.”
A request for expressions of interest for the fund, which was released by Defence on AusTender in February 2026 and closed at the end of April, sought views on the proposed model for the fund. The 25 co-investment proposals received by Defence came from a broad range of potential partners with experience in investment management, capital raising, and identifying and developing investment opportunities.
Now being evaluated by Defence, the proposals are commercial-in-confidence. Once selected, the successful firm or firms will work with the government to develop the investment proposal for further consideration.
International government-backed co-investment models, including the National Security Strategic Investment Fund in the UK and In-Q-Tel in the US, have demonstrated the strategic value of the model in attracting private capital into defence and dual-use capabilities.
National security is headed into those areas where there is a mesh between private sector capability and needs of government, Willox said, with technological advances such as autonomous undersea drones driving private sector interest.
Building the capacity and scale of Australian businesses and Australian expertise in the defence sphere was crucial, he added, with potentially valuable knock-on effects.
“There are myriad examples of where exposure to defence has then led to spill-over effects across other sectors; into space, for instance, into computing, into analytics,” he said, adding that Silicon Valley itself had military antecedents and that type of collaboration had great potential.
“There has to be a financial return in it for the private sector to be interested and engaged,” he said. “This is where the test will be for Defence to become more nimble and to recognise that; to get the best out of the collaboration with the private sector.”
The government has been openly pushing the notion of Defence-private sector partnerships in national security. “We’ve talked with them for a long time about this,” Willox said.
The government had “dramatically increased” funding for the defence forces, said Conroy.
“We are making record investments in our defence industry,” he added.
“And we are committed to supporting a future made in Australia. We want to turbocharge our homegrown defence industry and create more jobs for locals and this fund has enormous potential to further unlock Australian jobs and innovation.”