Investment in European defence and dual-use tech skyrockets with Russo-Ukrainian war

Venture capital (VC) investment in European defence technology will reach $1 billion in 2024, marking a five-fold increase since 2018, according to a new report by Dealroom.

The surge in funding reflects escalating geopolitical tensions and the ongoing conflict in Ukraine, with European startups capturing a growing share of defense-related capital.

The Dealroom data highlights that VC investment in defense tech across NATO member states and allied countries has grown by 25% in recent years, surpassing other sectors.

Since 2018, defense-related startups in Europe have secured $3 billion in funding, with Germany, the UK, and France accounting for 87% of that total.

Much of the funding has been concentrated in Germany, where companies, particularly in Munich, have drawn significant investment.

A notable contributor is the Munich-based battlefield AI startup Helsing, which raised $487 million in 2024. Meanwhile, the UK's "Silicon South West" region, renowned for its defense and space industries, has also attracted substantial investment, with cities like Bristol leading the way.

Jeannette zu Fürstenberg, managing director and head of Europe at General Catalyst, emphasised the importance of dual-use technologies: “By leveraging the power of AI, we can not only enhance our defense capabilities but also develop dual-use technologies with broader applications for critical national infrastructure.”

The US remains the dominant player in defence technology investment, attracting 83% of global VC funding.

However, 66% of the capital invested in European defense tech startups in 2024 came from American investors, marking a sharp uptick in cross-Atlantic interest.

The report, State of Defence Investment 2024: Resilience Builders in NATO & Europe, underscores the growing role of defense startups, with 370 VC-backed companies in NATO countries boasting a combined enterprise value of $161 billion.