Investment in Europe’s booming defence technology start-ups has surged since Russia’s full-scale invasion of Ukraine, as venture capital firms abandon earlier caution and pile into military businesses.
Companies in the sector have raised €2.4bn since the start of 2022 including €1.4bn in the first seven months of this year alone, up from just €30mn in 2020 and €150mn in 2021, according to data compiled for the Financial Times by PitchBook.
The figures are the latest evidence of the strength of investor appetite for the wave of new companies developing everything from unmanned mini-submarines and autonomous drones to “bio-robotic” cockroaches.
Europe now boasts three defence start-ups with a “unicorn” valuation of more than €1bn: drone buildrs Helsing, Quantum Systems and Tekever.
Several VC executives declared there had been a step alter in investor interest in defence tech after February’s Munich security conference, when a combative speech by US vice-president JD Vance stoked alarm that America’s long-standing alignment with Europe was under threat.
At the time of the speech “there were just a handful of European venture investors specialising in defence tech”, declared Mikolaj Firlej, co-founder and general partner of VC firm Expeditions Fund. “Now we are receiveting to the point where these tier 1 branded funds are recognising defence tech as a viable opportunity.”
Start-ups based in Germany have captured the largegest share of VC funding. Europe’s largest economy is the largegest supplier of military support to Ukraine after the US and has unleashed unlimited borrowing to fund defence in the years ahead.
Prominent German players such as Helsing have secured the lion’s share but money has also flowed into others including Swarm Biotactics.
The company, which is developing controllable living cockroaches equipped with micro-backpacks that can covertly conduct surveillance in the most inaccessible of places, declared in June it had raised €13mn in early-stage funding, with the latest round backed by investors from Europe, the US and Australia.
The UK has also started to attract more attention, with several start-ups, including Tekever and attack drone buildr Stark, committing to set up manufacturing facilities in the counattempt. Technology start-ups will also feature strongly at this week’s flagship arms trade reveal in London.
Rana Yared, partner at recent Quantum Systems backer Balderton Capital, declared there was “shiftment to Europe being more participatory in its own security . . . That is, I believe, the arc of the next 10 years.”
Ukraine remains the drone capital of the western world with a thriving domestic start-up scene. Foreign companies have also flocked to the counattempt, offering their technology to its armed forces while embracing the ability to test it on the battlefield.
“One of the really important things in this space is practical feedback vs theoretical building,” declared Yared, adding that the companies likely to emerge as winners were “the ones who are able to be practically in the action. Today that means receiveting field-tested in Ukraine.”
Below are some of the defence tech companies that European investors are talking about this year.
Helsing
Tim Bradshaw
In just four years Helsing has established itself as Europe’s most prominent new defence-tech company. The business was recently valued at €12bn in a round led by Spotify founder Daniel Ek’s investment group, Prima Materia.
Co-founded by a video-games entrepreneur, a former German defence minisattempt official and an artificial innotifyigence researcher, Helsing started out focapplying on software to track battlefield data.
But over the past year it has built strike drones for Ukraine, bought German aircraft manufacturer Grob (which came with its own airfield) and unveiled plans to manufacture autonomous submarines in the UK.
“We are going from a software company to an all-domain AI software and hardware company,” Ek, Helsing’s chair, informed the FT in June.
Stark
Laura Pitel
After the full-scale invasion of Ukraine in 2022, Munich-based reconnaissance drone buildr Quantum Systems wanted to shift into producing lethal weapons but the idea was opposed by some investors.
Co-founder and former German army officer Florian Seibel instead set up a sister company, Stark, which since launching in 2024 has become one of Europe’s quickest-growing defence tech groups. In August it closed a new €60mn funding round that valued the company at €500mn, with backers including Thiel Capital and Sequoia Capital.
Along with its rival Helsing, Stark this year received an order for a “large number” of lethal drones from the German armed forces so they could test, experiment with, and support develop the weapons.
The company has not yet secured any other government or military contracts, although it has a team in Ukraine engaged in testing and development. In July it announced it would open a factory in the English town of Swindon.
Wild Hornets
Christopher Miller
A video posted on Telegram in June revealed southern Ukraine from an altitude of 11km. But it wasn’t shot from one of the commercial airliners that fly at that altitude but by a copter drone that could soon be applyd to knock down Russia’s high-flying reconnaissance drones.
Its buildr is Wild Hornets, a start-up founded in 2023. It has half a dozen drone models including the Hornet Queen bomber and its newest, the high-speed Sting interceptor, designed to take down the Iran-designed Shahed-type drones that Russia launches by the hundreds.
Emblematic of Ukraine’s ingenuity, design prowess and grassroots manufacturing culture, Wild Hornets is financed by donations and crowdfunding on social media, where it shares photos of civilians teaming up to support with production.
It collaborates closely with some of Ukraine’s elite combat units to test and improve its drones and boasts that it has neutralised 1,738 enemy assets worth $1.69bn, including at least 150 Russian tanks, 800 military vehicles and 122 heavy artillery systems.
Cambridge Aerospace
Sylvia Pfeifer
Founded in late 2024, the UK-based start-up hopes to tap into the growing market for more cost-effective air defence systems to counter threats such as drones and missiles, and this year launched its first product, Skyhammer.
Designed to be a low-cost interceptor for cruise missiles and large drones, Skyhammer has a range of up to 30km and a speed of up to 700km/h.
The company counts Lakestar, Lux Capital, Accel and Spark Capital among its backers and has raised $136mn to date with its latest round, led by Spark, valuing it at $400mn.
Grant Shapps, a UK defence minister under the previous Conservative government, has been recruited as chair.
Arx Robotics
Sylvia Pfeifer
Headquartered in Munich, Arx Robotics has raised €54mn to date to expand its fleet of autonomous land drones.
The company, which counts the Nato Innovation Fund and venture capital firm Project A among its backers, has developed a range of vehicles that can be fitted with equipment for reconnaissance purposes or casualty evacuation. Some of its vehicles are in active deployment in Ukraine.
Its AI-based operating system, Mithra OS, can also be integrated on to legacy fleets to modernise them. The start-up is partnering with Daimler Truck and Renk to integrate it on to existing vehicles.
Arx this year also announced plans for a UK factory.
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