In 2024, $1 billion in venture capital will be invested in European defense technology, a first on the continent and a five-fold increase since 2018. This investment was made as a result of both increased geopolitical instability and Russia’s brutal invasion of Ukraine. .
VC investment in defense-related technology outpaces other types of investment by 25% across a wide range of NATO members and allies, totaling $3 billion since 2018, according to data included in a new report from Deal Room. It becomes.
Since then, the majority of investment in the sector has been accounted for by German, British and French startups, which together account for 87% or $2.2 billion. German defense technology companies alone have raised more funding in the past six years than Scandinavian, Dutch, Swiss and British companies combined. The news may come as a surprise to some observers, given the German government’s alarm over arms shipments to Ukraine.
Much of that investment was in companies based in Munich, which topped the list of European cities in the report. But most of that can be attributed to the $487 million raised by “battlefield AI” startup Hellsing in 2024.
Bristol and the UK’s ‘Silicon Southwest’ (best known for its defense and space industries) were the next to attract significant defense investment, followed by Paris.
In fact, the UK, with its large defense industry, is home to six of the top 10 European cities for investment in defense technology in the report. Bristol (2nd), London (4th), Reading (5th), Oxford (6th), Leeds (8th) and Cambridge (9th).
The report also shows that VC investment in defense technology across NATO countries has quadrupled in the past six years, reaching approximately $5.9 billion, with a total of $18 billion raised by defense startups in NATO countries and their allies. It also details what was achieved.
Additionally, the report counts 370 venture capital-backed defense technology startups in NATO countries with a combined enterprise value of $161 billion. Defense technology also accounts for 1.8% of European VC funding, a figure that has tripled since 2022.
Despite Europe’s growth, the US continues to dominate the defense technology sector, with US defense technology companies attracting 83% of VC investment.
And while more than half of the venture capital funding for European defense technology startups came from investors on the continent, funding from US investors accelerated significantly this year, with Provided 66% of capital to defense technology companies.
State of Defense Investment 2024: Resilience Builders in NATO & Europe, presented at the Resilience Conference, explores how dual-use technologies that can be applied to both civilian and military purposes are receiving significantly increased interest from investors. was also outlined.
General Catalyst Managing Director and Head of Europe Janet Z Furstenberg said in a statement: “By harnessing the power of AI, we can not only strengthen our defense capabilities but also develop dual-use technologies with broad applications for critical national infrastructure. We are driven by a mission to protect and build resilient infrastructure.”
