European Defense Tech Start-Ups Head for a $10.5 Billion Funding Record
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European defense tech start-ups have raised $7.4 billion (about 6.3 billion euros) in venture capital so far this year, nearly three times as much as in all of 2025, when the sector brought in $2.6 billion. That is the finding of the new “State of Defence Tech 2026” report by Dealroom and Resilience Media, which was just presented at the Resilience Conference in London. The authors expect the total to reach about $10.5 billion (about 9 billion euros) by the end of the year.
Where the money comes from is just as notable. As Bloomberg reports, U.S. investors are now putting more capital into European defense start-ups than European backers for the first time. According to the report, American investors account for 47 percent of the funding, up from 17 percent in 2020. The most active include Accel, Founders Fund, General Catalyst, Lightspeed and Y Combinator.
Europe’s Fastest-Growing Venture Sector
Defense tech’s share of all European venture capital has almost tripled within a year, rising from 4 percent to 11.1 percent. Dealroom expects the sector to grow 309 percent this year, ahead of space and robotics. European venture funding overall is projected to grow just 38 percent over the same period.
Drones attract the most money by far, with $4.7 billion raised across 40 funding rounds this year. Counter-drone technology has drawn $1.2 billion, and maritime robotics, including uncrewed surface and underwater vessels, about $800 million.
Munich at the Center of the Boom
Germany leads the country rankings with $3.5 billion, followed by Finland with $1.2 billion and Britain with $932 million. Much of Germany’s lead comes from two Munich companies. Helsing raised $1.8 billion in July at a valuation of $18 billion, less than two weeks after the drone maker Quantum Systems raised $1.2 billion at a valuation of $8 billion. The two deals set back-to-back records for the largest European defense tech funding round. As recently as 2021, Helsing’s $113 million Series A was enough for the record.
Germany Funds Tens of Thousands of Quantum Systems Interceptor Drones for Ukraine
New heavyweights are emerging beyond Munich as well, such as the Portuguese-British drone maker Tekever, valued at 5.5 billion euros, and the British interceptor missile maker Cambridge Aerospace. In Austria, the Vienna-based deep tech company TTTech recently set up a subsidiary for space, defense and critical infrastructure.
Few Exits, Slow Procurement
The picture has its blemishes, however. According to the report, mega-rounds account for more than 85 percent of this year’s funding, so the record total rests on a handful of companies. Exits also remain scarce. Across NATO countries, Dealroom expects 31 exits this year, but their combined value of $15.4 billion is projected to fall below last year’s $18.6 billion. Only one European company ranks among the ten largest defense tech exits of all time.
“Lack of exits is indeed an issue here in Europe, but I think it’s a problem in the U.S. as well,” Alex Ferrara, a London-based partner at Bessemer Venture Partners, told Resilience Media. Unlike enterprise software, he said, the defense sector has only a small number of strategic acquirers.
The biggest hurdle, though, is procurement. In Germany, start-ups struggle to move from trials to real contracts despite a defense budget of more than 100 billion euros. In Britain, just 4 percent of the Ministry of Defence’s direct spending with domestic industry recently went to small and medium-sized businesses. The investor money is there. Whether it turns into systems that militaries actually buy remains to be seen.
