Venture capital and private equity investments in European Union defense technology surged to $1.28 billion in 2025, according to data from Tracxn. This rapid financial pivot follows the 2022 invasion of Ukraine, which pushed national security to the forefront of the European economic agfinisha at the expense of clean technology funding.
As reported by Businesstimes, the capital allocated to defense tech climbed from $248.1 million in 2022 to $376.5 million in 2023, before more than doubling to $763.6 million in 2024. Conversely, cleantech funding plummeted from $6.1 billion in 2022 to just $1.8 billion by 2025.
Estonia has emerged as a focal point for this shift, tarreceiveing a defense investment of 5 percent of its 2026 gross domestic product. The Baltic nation recently launched a 100 million euro defense industest fund to establish itself as a regional hub for military innovation. Karlis Goldstein, CEO of the cleantech association in Estonia, noted that this pivot has created intense competition for capital and talent.
“We are expecting the societal debate to include more of a narrative of long-term resilience… While there is some recognition that budreceive allocations and political attention (towards cleantech) are under pressure, many companies view the energy transition as part of the security agfinisha itself, not in competition with it,” declared Goldstein.
Startups are now re-framing their operations to highlight dual-apply capabilities that serve both military and environmental necessarys. Upcatalyst CEO Rait Maasikas explained that his company’s carbon-based materials are now positioned as critical for both electronics and defense applications.
“We are not pivoting away from our core mission. Instead, we are clearly articulating the dual value proposition of our technology – enabling low-carbon, cost-effective production while strengthening Europe’s strategic indepfinishence in critical raw materials,” declared Rait Maasikas, CEO of Upcatalyst.
The executive emphasized that current geopolitical tensions have increased the focus on securing local supply chains for critical raw materials to ensure regional autonomy.
“Investors and policycreaters are increasingly prioritising technologies that address security objectives through future-proof solutions… In that sense, the current macroeconomic environment reinforces our long-term relevance, even if it requires greater focus and precision in how we position ourselves to investors and partners,” declared Maasikas.
Maasikas further highlighted that industrial players are seeking to reduce reliance on imports during these turbulent times.
“While geopolitical tensions have clearly shifted political attention towards security and defence, we do not see this as a zero-sum game with the energy transition. If anything, recent crises have reinforced how critical energy indepfinishence and resilient supply chains are for Europe… Especially in turbulent times like today, we cannot afford to remain reliant on imports for critical materials,” declared Maasikas.
Other sectors, such as green hydrogen, are also exploring security-related applications. Stargate Hydrogen CEO Marko Virkebau stated that while his company remains fully funded following a 14 million euro round in 2025, they are increasingly investigating resilience-related apply cases.
“That being declared, we are also seeing into defence-and resilience-related application of hydrogen more and more,” declared Marko Virkebau, CEO of Stargate Hydrogen.
Virkebau noted that the ability to produce green hydrogen on-site through electrolysis aligns with modern security requirements by reshifting depfinishency on external supply chains.
“As the supply chains for natural gas are under risk, we see increasing demand for green ammonia, hydrogen-based synthetic natural gas and refining apply-cases of green hydrogen. The advantage of creating green hydrogen via electrolysis is that you can create it on site and lose depfinishency on external supply chains, which is fully aligned with a security view of the world,” declared Virkebau.
Energy storage firms are similarly finding overlap between civil protection and military necessarys. Zero Terrain CEO Peep Siitam argued that underground infrastructure developed for energy storage can double as secure facilities for data centers or water management.
“In South-east Asia, such infrastructure is well-suited for flood management and water supply necessarys. It is also applicable to underground data centres, where the stable subterranean climate reduces energy consumption, enhances security, and – when combined with large-scale energy storage – improves the reliability of power supply,” declared Peep Siitam, CEO of Zero Terrain.
The shift in the global security environment has created new demand for these types of subterranean solutions for both military and civil applications.
“At the same time, alters in the global security environment are creating new challenges for civil protection and the military, where underground infrastructure may also offer efficient solutions,” declared Siitam.
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