Amid escalating geopolitical tensions and a renewed focus on military preparedness, European defense technology is no longer a niche pursuit, but a strategic imperative. Recognized by venture capital funds across NATO member states, startups have raised $9.1 billion so far in 2025.
According to a report by Dealroom “State of Defense Tech 2025”, European defense startups are on track to raise around $13.7 billion by year’s end, compared to $6.5 billion in 2024, signaling a dramatic shift in investor sentiment.
From niche to necessity
Following Russia’s invasion of Ukraine in 2022, European governments and investors were jolted into a strategic rethink, and elevated defense and dual-use technologies from fringe interest to national priority.
Prior to 2020, defense accounted for a negligible amount of funding at just 1% compared to 4% today. In the EU alone, defense accounts for 6.2% of funding making it the fastest-growing category in European venture capital. Investment by VC funds has roughly doubled in the past year alone, with a record $1.5 billion raised in the past year and a projected $2.3 billion by the year’s end-compared to $1 billion last year.
Germany-based Helsing, an AI defense startup, epitomizes this shift. The company secured €600 million ($700 million) in 2025, following a €450 million round in 2024. Portugal’s Tekever also raised €70 million ($82 million), underscoring the breadth of investor appetite across the continent.
AI and Autonomy are leading the charge
Artificial intelligence remains the dominant force in European defense tech, attracting $929 million in funding this year alone. Robotics and autonomous systems, particularly unmanned aerial vehicles (UAVs) and drones, have seen the highest number of deals, with 30 rounds closed in 2025.
Beyond military-first startups, dual-use sectors like quantum computing, semiconductors, and space technologies are also gaining traction. Quantum firms have drawn over $1 billion in 2025, reflecting a broader redefinition of security that includes scientific and infrastructure resilience. According to the report, that sector is projected to reach $4.7 billion in funding this year, an increase of 32% compared to 2024.
A New Breed of Investors
The investor landscape is evolving rapidly. Since 2019, participation in European defense tech has quadrupled. Specialist funds are proliferating, with 21 now active, up from just eight before 2022. Dutch VC firm Keen recently raised a €125 million ($146 million) defense-focused fund, while NATO’s €1 billion Innovation Fund is backing strategic technologies across the alliance.
Corporate giants are also entering the fray as Germany’s Deutsche Telekom and Porsche SE are reportedly anchoring a €500 million ($583 million) venture fund managed by DTCP, aimed at bolstering Europe’s defense tech ecosystem.
With US investors now filling 40–50% of late-stage European defense rounds, transatlantic capital is reinforcing Europe’s military-industrial base. The sector’s projected 132% year-on-year growth makes it the fastest-rising venture vertical in Europe, a clear signal that defense tech is no longer peripheral.
As NATO doubles down on readiness and as European governments continue to recalibrate their security doctrines, defense technology is emerging as one of the continent’s most dynamic, and strategically vital, investment frontiers.