When European Commission president Ursula von der Leyen described scaling entrepreneurs as the first victims of the fragmented regulatory landscape across EU member states, she was most likely not referring only to defence tech founders. Yet EU Inc., the campaign to create a new form of EU-wide company entity and make it easier to do business across the bloc, could unexpectedly reduce one of the defence sector's biggest sources of friction.

The media has called EU Inc. — known as the 28th regime — Europe's answer to the Delaware C Corp, referring to the most popular US jurisdiction for technology startups. From a venture investor's point of view, despite a fair amount of public criticism, the logic behind the new framework is clear. For a fast-growing startup, a single entity that operates across the EU is easier than navigating 27 legal systems and more than 60 national company forms. Not to mention the lower legal expenses.

In defence, intellectual property is the Holy Grail. Defence companies can use traditional IP regimes, but in today's market, where everyone is trying to copy everyone else's work, publishing patents is not always wise. Defence IP is, in effect, not a patent but the knowledge of an engineer that the company buys under contract. With innovation cycles in modern warfare shifting every two to three months, not filing or publishing patents makes even more sense.

Once this legal form exists, the country a defence company is based in should matter far less. In terms of IP, regulation and access to capital, a company could be a security provider for every EU member state rather than remain locked in its home market. Registering a company in Germany, for instance, can take up to six months or longer. By then, the manufacturer loses the chance to bid and the customer loses access to potentially better technology. If a single EU-level legal form existed and every member state had to recognise it as domestic, that requirement would lose much of its force.