PARIS ― Definvest has invested in Kalray, a French high-performance chip maker, marking the first investment by the specialist state-backed fund, the Armed Forces Ministry said.

That funding for Kalray, deemed to be a “strategic company,” was for €10 million (U.S. $12 million) of convertible bonds, the second tranche of a total €23.6 million in financing launched last June, the ministry said in a May 2 joint statement with Kalray and Bpifrance, a state-owned bank.

The Direction Générale de l’Armement procurement office has backed Kalray since 2010, the statement noted. “To strengthen its support for the development of this strategic company, the Definvest fund has acquired a stake, thus undertaking its first transaction.”

The equity fund, which was created to invest in small and medium enterprises specializing in advanced defense technology, subscribed to €2 million, and Alliance Ventures subscribed to €4 million, Kalray Chairman and CEO Eric Baissus told Defense News.

“The financing is important for our marketing and development of technology,” said Baissus, adding that backing by major car companies was a major boost.

Alliance Ventures is a venture capital fund backed by car-builders Renault, Nissan and Mitsubishi.

Kalray builds a second-generation processor, dubbed Bostan, which has been fitted to Symbioz, a concept car built by Renault to explore technology for an autonomous driverless car, he said.

A third-generation processor, dubbed Coolidge, will be launched next year, he said. The company, based in Grenoble, picked the name of the chip from one of the Alpine peaks that bears that name, he added.

“The ministry of the Armed Forces is steering a steady course towards innovation and all those who dare innovate,” Armed Forces Minister Florence Parly said. “Kalray is Definvest’s first investment, and I know many more will follow. This first investment sends out a strong signal to all entrepreneurs, researchers and engineers: National defense believes in you, invests in you.”

The new investors, Definvest and Alliance Ventures, joined institutional investors that took part in the first round of financing in June, namely Safran Corporate Ventures and Pengpai, a Chinese investment fund. Kalray approached the latter after receiving a recommendation from a Chinese car company.

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Those investors join the institutional shareholders, ACE Management, CEA Investissement, Eurkape! and Inocap Gestion, which also subscribed to the second tranche.

The government set up Definvest in November, seeking to address concerns in the procurement office that foreign investors might buy stakes in small and medium French enterprises and pass sensitive know-how overseas.

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