Europe's DefenseTech scene is booming. The current geopolitical situation has accelerated a transformation that was already underway, making defense technology a hotbed of innovation and investment. Venture capital funding for defense and security technologies soared to $5.2 billion last year, marking a significant break with its previous status as a niche sector. The European Union is fuelling this growth with initiatives such as the European Defense Fund, which will allocate over €1 billion to research by 2025. But what does this new landscape look like, and which startups are in the lead?

A buzzing scene..

Europe's DefenseTech scene is buzzing with activity in 2025. The ongoing Ukraine conflict has dramatically reshaped defense priorities across Europe. It's pushed the EU to actively reduce its dependence on U.S. security support and focus on building its own military capabilities. This shift is evident in the new 'Readiness 2030' security framework, which encourages EU members to source military supplies primarily from European providers.

The EU is doubling down on defense with major initiatives. The €800 billion "Rearm Europe" program aims to unlock massive private investment in the sector. Meanwhile, individual countries like Germany have created substantial defense funds, with a €500 billion off-budget allocation.

Technologically, the focus is definitely on next-generation capabilities. The European Defence Fund's 2025 Work Programme is investing over €1 billion in critical areas including AI, cybersecurity, autonomous systems, and digital transformation. Specific areas of interest include ground combat, space technologies, air combat, and energy resilience.

Simultaneously, we have seen an increase in private sector investment - VC funding in DefenseTech reached $5.2 billion last year, or an increase of 24% on the previous year (and 5 times the level of the last decade).

Leading European DefenseTech startups

Helsing AI (Germany)

  • Total funding: €762 million.
  • Focus: AI-powered defense software and autonomous strike drones.
  • Impact: Helsing AI plays a big role in improving European defense capabilities with its AI-driven systems and hardware solutions. Their technology is designed to provide real-time intelligence and strategic advantages in modern warfare.
  • Solution:
    • AI battlefield software that integrates real-time data from sensors and cameras to enhance situational awareness.
    • Autonomous strike drones (HX-2) designed for complex combat scenarios, capable of operating in swarms.
    • AI infrastructure for the Future Combat Air System (FCAS), which aims to improve decision-making and coordination.
    • Electronic Warfare upgrades for German Eurofighters, enhancing their survivability and mission effectiveness.
  • Notable contracts: Collaborations with NATO and the Ukrainian government for AI-driven defense systems; classified projects in maritime and land domains.
  • Co-investors: General Catalyst, Accel, Saab, Lightspeed, Plural, Greenoaks, Spotify co founder Daniel Ek, and Prima Materia.

Alloyed (UK)

  • Total funding: At least £37 million.
    Focus: Advanced metallic alloys for aerospace, defense, and additive manufacturing.
  • Impact: Alloyed is advancing material science by creating components that are both lighter and stronger. Their innovations have the potential to significantly enhance the performance of military equipment and space technology, providing a technological edge in these sectors.
  • Solution:
    • Proprietary Alloys-by-Design platform that leverages AI and machine learning to create custom, lightweight, and durable materials.
    • High-performance metal components used in jet engines, satellite structures, and semiconductor equipment.
    • Specialized alloys for extreme environments, including space exploration and hypersonic flight.
  • Co-investors: SPARX Asset Management, Development Bank of Japan, Aviva Investors, Oxford Science Enterprises, Anglo American plc.

ARX Robotics (Germany)

  • Total funding: €9 million.
  • Focus: Autonomous unmanned ground systems for defense applications.
  • Impact: ARX addresses Europe's need for scalable robotic systems to enhance military readiness for autonomous warfare. Their modular approach ensures flexibility and mass deployment capabilities, potentially transforming ground operations and logistics in modern conflicts.
  • Solution:
    • Modular unmanned ground vehicles (UGVs) adaptable for transport, medical evacuation, reconnaissance, and live-fire training scenarios.
    • GEREON robots, a series of versatile UGVs tested and deployed by armed forces in Germany, Austria, Switzerland, Hungary, and Ukraine.
    • AI-driven control systems for autonomous navigation and mission execution in complex environments.
  • Key features: Modular design allowing rapid reconfiguration for different missions, advanced AI for autonomous operation, and ruggedized construction for battlefield durability.
  • Co-investors: NATO Innovation Fund (NIF), Project A Ventures, Discovery Ventures.

Akhetonics (Germany)

  • Total funding: €6 million.
  • Focus: All-optical chips for high-performance computing in defense and aerospace applications.
  • Impact: Akhetonics aims to revolutionize computing with photonic chips that are faster, cheaper, and geopolitically independent compared to traditional semiconductors. This technology could provide European defense systems with unparalleled processing capabilities, enabling advanced AI applications, secure communications, and real-time data analysis in battlefield scenarios.
  • Solution:
    • Optical gates integrated into chips offering terahertz-level switching speeds, significantly outperforming traditional electronic semiconductors.
    • Specialized chips designed for real-time networking, avionics, and space applications, capable of operating in extreme environments.
    • Quantum-inspired computing solutions for complex defense simulations and cryptography.
  • Unique selling point: Akhetonics' technology promises to overcome the limitations of Moore's Law, offering exponential improvements in computing power and energy efficiency.
  • Co-investors: Supported by Leibniz Institute for High-Performance Microelectronics.

BforeAI (France)

  • Total funding: At least $24 million.
  • Focus: Behavioral AI for predictive attack intelligence and cybersecurity.
  • Impact: As cyberwarfare intensifies, BforeAI's predictive capabilities are essential to protect Europe's defense networks and critical infrastructures. BforeAI's technology could significantly enhance the cybersecurity posture of military and government organizations, providing proactive defense against state-sponsored cyberattacks and other sophisticated threats.
  • Key products:
    • Digital Risk Protection Services that anticipate cyber threats before they occur using predictive analytics and behavioral AI.
    • AI-driven tools tailored for government agencies and corporations to safeguard critical infrastructure against sophisticated cyber attacks.
    • Threat intelligence platform that aggregates and analyzes data from multiple sources to identify emerging threats.
  • Unique approach: BforeAI's technology goes beyond traditional reactive cybersecurity measures, using advanced AI to predict and prevent attacks before they happen.
  • Co-investors: Information not available; likely backed by European venture funds focusing on cybersecurity innovations.

Areas of focus

To us, successful players are the ones addressing key challenges in modern warfare by developing advanced technologies, e.g., AI-powered battlefield management systems now reduce decision-making time by up to 90%, situational awareness tech frameworks can increase target identification accuracy by over 85%, autonomous coordination of unmanned vehicles - drone swarms responding 100 times faster to threats than human-controlled units, etc.

We think that much innovation will also be made on advanced materials, such as next-generation composites and alloys, which offer superior strength and heat resistance for aerospace and defense applications. We also see potential in photonics and quantum computing to overcome traditional semiconductor limitations, with optical processors running simulations 1,000 times faster than traditional semiconductor-based systems while consuming 10 times less energy.

Cybersecurity is another critical area where startups will use behavioral AI to predict and prevent cyber threats before they occur - AI-driven systems cut cyberattack detection time from 280 days to seconds, preventing breaches before they happen. Threat detection AI reduces false alarms by 90%, allowing defense teams to focus on real threats.

Last but not least, we expect successful startups to work on stealth and electronic warfare technologies, i.e., developing advanced coatings to reduce radar signatures and creating electronic warfare upgrades for existing platforms. Or anti-hypersensitivity technologies to address new threats.

Looking ahead

We definitely see sustained growth ahead. European defense budgets are greatly expanding, driven by the need for technological sovereignty and enhanced military capabilities. At the same time, governmental, institutional, and private capital is increasingly flowing into DefenseTech, signaling confidence in the long-term potential of the space. Breakthroughs in quantum computing, hypersonics, and next-generation electronic warfare will further drive innovation, creating opportunities across the ecosystem.