The defense and resilience tech sector in Europe has reached an unprecedented milestone, accounting for 10% of all venture capital funding in the region. This dramatic shift in investor sentiment is largely attributed to the ongoing war in Ukraine. In 2024, startups in the defense, security, and resilience sector secured a record $5.2 billion in venture capital, representing a 24% increase from the previous year and nearly five times more than in 2019.
Despite this surge, Europe’s total investment in this sector is only about double the funding of a single U.S. defense tech company, Anduril. Yoram Wijngaarde, Founder and CEO of Dealroom, commented, “Appetite for defense, security, and resilience startup investment is unrecognizable in Europe from just a few years ago. It follows a trend of investing in deep technologies that address Europe’s core strategic needs.”
The overlap between defense, security, and resilience and deep tech funding is now evident, with the former accounting for one-third of all deep tech venture funding in Europe.
This classification includes a broad array of technologies critical for regional sovereignty, such as supply chain, quantum, and energy technologies. The NATO Innovation Fund has been active in this space, supporting startups like Portugal-based Tekever, a dual-use drone company. John Ridge, a British Army veteran, was recently appointed as the fund’s chief adoption officer to further this mission.
The market is also seeing increased participation from generalist venture capitalists, who now find it easier to invest in dual-use technology, which encompasses both civilian and military applications.
Growing appetite for defense tech investments
Pure defense tech remains a smaller subset of the overall funding but is on the rise, with a fivefold increase anticipated since 2018, according to a previous Dealroom report.
Germany has emerged as a significant hub for defense, security, and resilience funding, with cities like Munich and Berlin leading the charge. The country outpaced the U.K. and France in this sector in 2024. Notable investments include AI defense tech company Helsing, which raised significant funds in a Series C round led by General Catalyst.
The European Commission and the European Investment Fund have also stepped up their efforts with the launch of the Defence Equity Facility, a €175 million fund. This fund, initiated in January 2024, is expected to announce its first investments soon. Despite these advancements, challenges remain, particularly around fragmentation and slow adoption.
However, the pipeline of early-stage companies in the defense sector is robust, as evidenced by recent hackathons across Europe. Wijngaarde added, “Despite recent growth, defense, security, and resilience tech remains a relatively nascent sector. But the data shows an active pipeline of early-stage companies looking to change that.”
