Saudi defence fund seeks $150 million to expand local military technology production

New Delhi: Saudi Arabia is now expanding its domestic defence manufacturing capabilities as recent attacks across the Gulf and Red Sea highlight gaps in the region’s military preparedness. The focus is increasingly shifting towards drones, air defence and autonomous military systems that can be produced or integrated locally.

Masna Ventures, Saudi Arabia’s first defence-focused venture capital fund, has applied to the capital markets authority to increase its investment capacity to $150 million from $100 million. The Sharia-compliant fund is backed by a prominent Saudi family office and is currently funded by Saudi nationals.

The fund is looking to invest in technologies developed by US and other allied defence companies while helping bring their manufacturing to Saudi Arabia. It is also accelerating cooperation with major defence manufacturers and defence technology startups developing autonomous platforms for military applications.

Reuters, citing Masna general partner, Lucien Zeigler, reported that the fund is considering bringing in international investors but has not disclosed details about potential investors or the amount of capital involved. Zeigler said the strategy was aimed at strengthening Saudi sovereignty while giving Saudi investors an opportunity to participate in the defence sector.

Masna’s investment focus includes unmanned aerial vehicles, unmanned surface vessels and underwater systems. Maritime capabilities have become a particular priority as instability around the Red Sea and Gulf poses risks to shipping, energy infrastructure and regional security.

The fund has partnered with Saudi defence manufacturer SR2 defence systems, which was co-founded by Zeigler, to develop advanced defence technology inside the kingdom. Masna is targeting three operational joint ventures and six capital investments during 2026 as it expands its portfolio.

One of its existing projects is a joint venture between SR2 and US drone maker Vector Defense, which Zeigler said is now ramping up production and activity. Masna led a funding round for the venture that was three times oversubscribed, according to Zeigler.

Masna also plans to support another joint venture focused on counter-drone systems using what Zeigler described as world-leading US hard-kill technology. The systems are intended to physically destroy incoming drones, adding another layer to Saudi Arabia’s air-defence capabilities.

The growing emphasis on drones comes as unmanned systems have become a major feature of conflicts involving Iran, the Houthis and their regional opponents. Saudi Arabia has faced recent strikes by Iran-backed groups that threatened oil exports, while increased Houthi activity near the Bab al-Mandab Strait has raised concerns about further disruption to Red Sea shipping.

“Right now, it is drones and aerial defence above all else,” Zeigler said, adding that events during the past week had underscored those requirements. The comments come as Saudi Arabia seeks to strengthen its ability to respond to threats while reducing reliance on overseas defence supply chains.

Defence technology investment is also growing globally, with venture capital firms investing $19.4 billion in the sector in 2026, according to PitchBook data cited by Reuters. Saudi Arabia recorded around $200 million in venture capital deals during the same period, highlighting the kingdom’s growing push to attract investment into emerging technologies.