The sector is driven by rising geopolitical tensions, an agenda favorable to the United States and the rise of sovereignty issues in Europe.
Twelve billion dollars: this is the amount that Defense Tech start-ups have raised worldwide from venture capital funds since the start of the year, more than the 9.95 billion that the sector raised over the whole of 2025, according to Pitchbook data.
These figures only count pure venture capital rounds, without debt or public subsidies, and exclude companies that also operate in other sectors (cybersecurity, space), which explains why they are lower than the $37.9 billion frequently cited for 2025. This more restricted definition has the advantage of only reflecting the interest of private investors, by removing the effect due to the simple increase in state defense budgets.
The progression is even more spectacular if we go back a few years: in 2023, Defense Tech start-ups had only raised $3 billion from VCs. In 2022, 1.5 billion.
Tech Defense: what is it?
The Defense Tech sector has been driven for several years by a growing number of young startups who wish to apply the methods of Silicon Valley (agility, use of software and cutting-edge technologies, “Move fast and break things” mentality, etc.) to modernize the defense industry, dominated, since the consolidation of the 1990s, by the famous Big Five in the United States (Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics) and in Europe by Airbus, BAE Systems, Rheinmetall, MDBA, Thalès, Leonardo and Saab.
“Their logic is that of heavy public procurement: needs defined by the State, long calls for tenders, development cycles which can be counted in decades, strong vertical integration, an almost organic relationship with the Ministries of Defense. This model ensures a certain budgetary visibility and an ability to manage systems of extreme complexity. It also produces great inertia both on a technological and procedural level,” explain researchers Nicolas Minvielle and Marie Roussie in an article published on The Conversation.
An oligopoly that young shoots now intend to challenge. They are called Anduril, Palantir and Shield AI, in the United States, or Helsing, Stark, Kraken and Command AI in Europe. If the European sector is dynamic, venture capital financing is currently very largely oriented towards the American market, which alone attracted 11.4 billion out of the twelve raised in 2026, compared to only 460 million for Europe. Several investment rounds could, however, slightly rebalance the balance for the rest of the year, with Helsing seeking for example to raise the equivalent of 1.2 billion, and Stark 300 million. The American market is also unbalanced, with only one start-up (Anduril) having raised five billion dollars.
These companies provide drones and autonomous weapons systems (Anduril, Stark, Helsing), AI software for military use (Palantir, Command AI), and even autonomous surface ships and underwater vehicles (Kraken). Even those that offer hardware rely heavily on software (particularly big data processing and AI) for their value proposition. Their working methods, inherited from Silicon Valley, consist of rapid development cycles, with numerous tests to learn from the reality on the ground, rather than the execution of specifications fixed in advance.
Collaboration more than competition
If they intend to compete with the big names in defense, they are in practice required to collaborate with them, start-ups bringing their agility and their ability to quickly test new devices, defense giants their funds, their relationships with governments and their industrial production capacity.
Anduril is thus a partner of Raytheon and Lockheed Martinwhile Helsing collaborates with Airbus. Defense giants also invest themselves in Defense Tech start-ups via their internal VC funds (such as Lockheed Ventures, Boeing HorizonX or Airbus Ventures), and set up programs and incubators to promote their growth, such as Trust My Tech at Thalès.
A boom induced by geopolitical factors
The growth of Defense Tech is linked to several factors, first and foremost to current geopolitics. VC spending thus began to climb after 2022 and Russia’s invasion of Ukraine, which also led European states to increase their military spending, an increase which continued with the return to power of Donald Trump and the disengagement of the United States from the European theater.
The lessons of the war in Ukraine, and, more recently, the Iranian conflict, have also convinced governments, arms giants and investors in key role that drones now play in modern warfareand gave a boost to Defense Tech companies specializing in this area. The young British start-up Kraken was, for example, selected by the Royal Navy to deploy its drones in the Strait of Hormuz in order to detect Iranian mines following the outbreak of the conflict.
Because the rise of the Defense Tech ecosystem reflects above all a profound evolution in military art, which involves finding new methods of deploying innovation. “As operations rely more and more on data and AI and weapon systems become “software-defined”, the advantage no longer lies only in the design of platforms – combat aircraft, tanks, submarines – but also in the mastery of the information architecture – collection, fusion, calculation (cloud/edge), interoperability – and in the ability to innovate very quickly,” write Alexandre Papaemmanuel and Laure de Roucy-Rochegonde, researchers at Ifri, in a recent study.
In the United States, Defense Tech boosted by the Trump administration
Across the Atlantic, the industry also received a boost from Donald Trump. Close to the most media figures in this ecosystem, such as Peter Thiel, co-founder of Palantir, and Palmer Luckey (Anduril), he has put in place an agenda aiming not only to significantly increase military spending (which must increase from 900 billion dollars this year to 1,500 billion next year), but also to rely more on the young shoots of Defense Tech.
Under his leadership, the Pentagon changed its working methods to reduce bureaucracy, accelerate the purchase of equipment and diversify its suppliers beyond the Big Five. Calls for tenders were opened to start-ups and purchasing deadlines shortened. The Pentagon has also made research and development a priority, publicly criticizing large traditional defense groups for allocating their cash to dividends and stock buybacks rather than innovation. The Trump administration has finally largely pushed for the rapid and massive adoption of AI by the army, which gives a boost to Defense Tech start-ups which are banking precisely on mastering the world of software and AI to make a name for themselves.
