$8.7 Billion: European Defence Tech Funding Hits a New Record
European defence technology startups raised $8.7 billion in 2025, according to a joint report by Dealroom and the NATO Innovation Fund published on February 9, 2026. That figure represents a 55% increase year-over-year and is nearly four times what the sector attracted just five years ago.
The numbers confirm what many in the industry already sensed: European defence tech has moved from a niche corner of venture capital into a mainstream asset class. With 21 specialist defence funds now active -- up from just 8 before Russia's full-scale invasion of Ukraine in 2022 -- the infrastructure for sustained investment finally exists.
This is not a bubble. It is a structural repricing of European security, and it is creating thousands of new jobs across the continent.
Where the Money Went
AI Dominates
Artificial intelligence underpinned 44% of all defence tech funding in 2025. That includes autonomous systems, computer vision for ISR (intelligence, surveillance, and reconnaissance), natural language processing for intelligence analysis, and AI-driven decision support.
Helsing, the Munich and London-based AI defence company, exemplifies this trend. Its $600 million Series D valued the company at approximately $12 billion, making it Europe's most valuable defence startup. The company applies AI to electronic warfare, autonomous systems, and military decision-making.
But AI investment in defence extends far beyond a single company. Startups building AI for drone autonomy, predictive maintenance, cyber threat detection, and logistics optimization all attracted significant capital in 2025.
Late-Stage Investment Tripled
Late-stage investment (Series C and beyond) tripled to $4.7 billion in 2025. This is a critical indicator of market maturity. Early-stage funding shows investor interest; late-stage funding shows investor conviction that these companies can build real products, win real contracts, and scale.
The tripling of late-stage capital means defence startups are no longer stuck in the "valley of death" between prototype and production. Institutional investors, sovereign wealth funds, and even pension funds are now writing checks large enough to fund manufacturing, hiring, and international expansion.
21 Specialist Defence Funds
Perhaps the most structurally important development: 21 venture funds now specialise in European defence tech, up from around 8 before 2022. These include:
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NATO Innovation Fund (NIF) -- the world's first multi-sovereign venture fund ($1.1 billion)
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Expeditions (Warsaw) -- second fund at $100M+, a 10x increase over its first
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Alpine Space Ventures, D2 Capital, First Light Group, and others focused exclusively on dual-use and defence technologies
Specialist funds matter because generalist VCs often lack the expertise to evaluate defence startups -- the sales cycles are longer, the compliance burden is higher, and the technology moats are deeper. Having 21 dedicated funds means more startups get funded by investors who understand the sector.
Geography: Munich Leads, CEE Surges
Munich: Europe's Defence Capital
Munich was the top European city for defence tech investment in 2025, with $1.7 billion raised -- an 18x increase since 2020. The Bavarian capital hosts Helsing, Isar Aerospace, Quantum Systems, ARX Robotics, and a dense network of AI, aerospace, and robotics startups.
Munich's dominance is driven by its combination of technical universities (TU Munich, LMU), proximity to major defence primes (HENSOLDT, Airbus Defence, MTU), and a growing cluster of defence-focused VCs. Explore all German defence tech companies on our interactive map.
CEE: The Fastest-Growing Region
Central and Eastern European defence tech showed the fastest growth, with investment increasing 2.7 times since 2020. Proximity to Russia, strong engineering talent pools, and relatively lower costs are driving the surge.
Sofia and Oslo emerged as new hubs alongside established centres in Tallinn, Warsaw, and Prague. Estonia's defence tech cluster -- including companies like Milrem Robotics -- punches far above the country's weight, with per-capita defence tech investment among the highest in Europe.
Browse defence tech companies across all 31 European countries on our interactive map to see how the ecosystem is distributed.
The UK and France Hold Strong
The United Kingdom and France remain major centres, with London and Paris hosting large clusters of defence, cybersecurity, and aerospace startups. The UK benefits from close ties to the US defence ecosystem and AUKUS; France benefits from a strong national defence industrial base and government procurement support.
What Is Driving This Investment Wave
Three forces are converging to drive record investment:
1. The Rearmament Imperative
European governments have committed to unprecedented defence spending increases. NATO members are targeting 2-3% of GDP on defence, and the EU has proposed mechanisms for $800 billion in additional defence investment through the ReArm Europe plan. Every euro of government spending creates demand for the products these startups build.
2. Ukraine as a Live Testing Ground
The war in Ukraine has accelerated technology cycles from years to months. Drones, electronic warfare, AI-powered targeting, and autonomous systems have all been validated in combat. Investors no longer need to bet on theoretical capabilities -- they can see what works.
3. The Dual-Use Opportunity
Many defence technologies have commercial applications. AI, cybersecurity, space technology, and advanced materials serve both military and civilian markets. This dual-use potential gives defence startups larger addressable markets and multiple revenue streams, making them more attractive to investors.
What This Means for Job Seekers
Record funding translates directly into record hiring. Defence startups flush with late-stage capital are scaling teams aggressively. The roles in highest demand include:
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AI and machine learning engineers -- the 44% AI funding share means nearly half of all new defence tech roles involve AI in some form
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Systems engineers -- integrating software with hardware in autonomous vehicles, drones, satellites, and sensor systems
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Cybersecurity specialists -- protecting defence systems and the startups themselves from nation-state threats
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Programme and product managers -- translating government requirements into shippable products
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Manufacturing and operations -- as companies move from prototype to production, they need people who can scale
The geographic spread of funding also means opportunity is not concentrated in a single city. While Munich leads, strong hiring is happening across Germany, the UK, France, the Nordics, Estonia, and increasingly Central and Eastern Europe.
DefenceJobs.org tracks 600+ open positions across 276+ companies in the European defence tech ecosystem. Whether you are a software engineer interested in autonomy, a hardware engineer building sensors, or a programme manager navigating government procurement, the opportunities are broader than at any point in the last decade.
Explore open roles by specialism: software engineering, hardware and systems, cybersecurity, or browse all positions.
Key Takeaways
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$8.7 billion raised in 2025 -- up 55% YoY, nearly 4x the level of five years ago. European defence tech is now a mainstream investment category
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AI drove 44% of all funding, making it the dominant technology theme across autonomous systems, ISR, electronic warfare, and decision support
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Munich leads Europe with $1.7B raised (18x since 2020), but CEE is the fastest-growing region at 2.7x growth
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Late-stage tripled to $4.7B, signalling that defence startups are reaching production scale -- and hiring at production scale
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21 specialist defence funds now provide the long-term capital infrastructure the sector needs to sustain growth