Non-Paper No 10/2025: Steering the State’s Purse

Written by Simon Sharghi-Erdmosa, Programme Associate at the CELIS Institute and CFIS 25 Programme Sherpa.

This paper examines two dimensions of state-backed investment through Strategic Investment Funds (SIFs): their role as capacity-building instruments that strengthen national security, and the governance and national security concerns they generate when operating across borders. Against the backdrop of rising geopolitical tensions and the politicization of international investment flows, SIFs can be seen as complementary tools to investment screening, enabling states to enhance domestic industrial capacity and reduce reliance on foreign capital in strategic sectors. Drawing on case studies of France’s Definvest, the United Kingdom’s National Security Strategic Investment Fund (NSSIF), and the US-backed TechMet, it explores how patient capital mobilized by SIFs supports strategic sectors, catalyzes private co-investment, and mitigates foreign control risks. It further assesses how the international expansion of such funds and the blurring of the line between financial and political objectives raise challenges for investment screening authorities.