Defense Technology Funding Trend: Germany Secures 90% of Europe's Largest Defense Funding Allocation
Europe's Defense Tech Sector Thriving with Record Funding
Europe's defense tech sector is experiencing a surge in growth, with significant investments pouring in and startups making headlines.
Leading the pack is Helsing, a private company valued at $13.2 billion, which has recently secured Europe's largest funding round of the year so far, $660 million. Helsing specializes in developing AI software for weapons, vehicles, and military strategy, and its technology has been integrated into battlefield simulations, electronic warfare for fighter jets, and drones in Ukraine.
In the first half of 2025, Europe's defense tech startups have already surpassed the total funding for the entire year 2024, reaching a staggering $971 million. This growth signifies a broader boom in Europe, with a focus on technologies like drones, submarines, and AI-based weaponry.
One of the most notable startups by funding raised so far in 2025 is Endurosat from Bulgaria. The company specializes in engineering and operating satellites for space missions, including Low Earth Orbit, and has raised a total of €68 million, with a recent Series B round of €43 million.
Another promising startup is Delian Alliance Industries from Greece, which raised $14 million (~€12.6 million) in a Series A round. The startup develops autonomous weapons such as drones and AI-enabled surveillance towers and plans to expand production internationally, especially targeting NATO partners.
Sector-focused VC funds are also gearing up for more investments in defense tech startups across Europe. SmartCap from Tallinn and Keen Venture Partners from Amsterdam have funds of €100 million and aiming for €125 million respectively, targeting investments in defense tech startups with a focus on cyber, robotics, AI, autonomous systems, and space tech.
The investments in defense tech startups also indicate a shift towards more tech-centric firms capturing a significant share of the market. Palantir, an AI-focused company, has been outperforming traditional defense giants. Swarm Biotactics, a German startup, raised €10mn ($11mn) to advance its biorobotic system that equips live cockroaches with sensors to monitor extreme environments. Quantum Systems, another German company, raised €160 million ($176 million) at a valuation north of €1 billion ($1.1 billion), building electric, AI-powered autonomous surveillance drones that can serve both military and civil purposes.
Munich-based Helsing recently unveiled plans for a fleet of autonomous reconnaissance submarines to boost Europe's maritime defenses. Skyral, a British startup founded by Nick Blair, secured a $20mn funding round for military simulation tech development for the British Army and NATO. ARX's machines, capable of carrying up to 500kg of military payloads, are tread-driven and can be equipped with radar, mine-sweeping devices, or medical stretchers.
Kate Leaman, chief market analyst at AvaTrade, stated that military tech companies with AI-driven solutions have "huge potential" for growth. The future of Europe's defense tech sector looks promising, with continued investor interest and momentum that carries into 2025 and beyond.
- The Delian Alliance Industries, a Greek startup, develops both drones and AI-enabled surveillance towers, showcasing the intersection of technology and sports in the form of automated machinery.
- The investments in defense tech startups, such as Quantum Systems and Swarm Biotactics, which focus on AI, robotics, and autonomous systems, indicate a shift from traditional sports-related activities towards a more technology-driven battlefield.
