In February, four years to the week after Russia launched its full-scale invasion of Ukraine, two European startups announced matching €30 million rounds to build the same thing: cheap missiles, produced at volume, designed to shoot down drones and cruise missiles before they hit their targets.
Frankenburg Technologies, a Tallinn-based company building low-cost interceptor systems, closed its round led by Plural, an Estonian VC, with the state-backed fund SmartCap also participating. Total funding now sits at €40 million. Munich-based Tytan Technologies raised its €30 million Series A co-led by Armira and the NATO Innovation Fund, bringing its total to €46 million. Its investor list reads like a roll call of European defence capital: Lakestar, Visionaries Club, OTB Ventures, Ukraine's D3 and 10x Group.
The timing was deliberate. But the urgency behind both raises has less to do with Ukraine's fourth anniversary and more to do with what happened thousands of kilometres south.
Lessons from June 2025
The Israel-Iran war in June 2025 exposed something European defence officials had been warning about for years. Israel, the United States and regional allies deployed missile defence systems at a scale Europe had never attempted. The results were mixed. Roughly 47 per cent of incoming Iranian missiles were intercepted, 273 out of 574, a rate that fell well short of what Western publics expected from multi-billion-dollar defence networks. One VC told Sifted the gap between what Europe could field and what the Middle East had actually tested in combat was impossible to ignore.
That observation stung because Europe's position was worse still. European governments have spent billions on legacy air defence through programmes run by MBDA, Diehl Defence and other primes. But those systems were designed for different threats: a handful of high-value incoming missiles, not swarms of cheap drones crossing a border by the hundred. Ukraine showed the world what mass drone warfare looks like. The Israel-Iran exchange showed what the defence against it might look like, even imperfectly. Europe had neither.
The venture capital response has been swift. European defence startups raised $8.7 billion in 2025, up 55 per cent year-on-year according to Dealroom and the NATO Innovation Fund. VCs had already poured hundreds of millions into strike drones. Now the money is rotating toward the harder problem: stopping those drones once they are in the air.
Two bets on the same thesis
Frankenburg and Tytan arrived at similar conclusions from different starting points. Both believe Europe needs interceptors that cost a fraction of what traditional missiles cost, produced in volumes that legacy defence manufacturers cannot match.
Frankenburg, which conducted missile field tests in August 2025, plans to use its new funding to open two mass production facilities in Europe with a target output of 100 missiles per day. The company is expanding from Estonia into the UK and Germany. Sten Tamkivi, co-founder of Plural, the VC that led Frankenburg's round, has argued publicly that defence must be cheap, fast and measured in millions of available units.
Tytan is taking a slightly different approach, layering AI-powered targeting onto its interceptor platform. The company already has confirmed orders from Ukraine and multiple government contracts. Its €30 million will fund manufacturing scale-up across Germany, Ukraine and allied markets.
They are not alone. Cambridge Aerospace, a UK-based company, raised roughly $100 million to build Skyhammer, a low-cost interceptor designed for drones and cruise missiles. French startup Egide closed an €8 million seed round for its own interceptor programme. Investors are backing anyone with a credible plan to fill Europe's air defence gap.
Startups versus primes
The question hanging over all of this is whether startups can actually deliver. Building an interceptor missile is not like building a surveillance drone. The engineering is harder. The system integration is more complex. The certification and testing requirements are stricter. And the customers, NATO governments, are famously slow procurement partners.
Traditional defence contractors have decades of experience with these challenges. What they lack is speed. The timeline from concept to production in a company like MBDA is measured in years, sometimes decades. Frankenburg is talking about 100 missiles a day. That kind of production cadence belongs to consumer electronics, not defence. Whether a startup with €40 million in total funding can actually build and operate factories at that scale is an open question.
But the primes have their own problem. Their systems were designed for a world where a single interceptor might cost hundreds of thousands of euros because you would only ever need a few dozen. Against a swarm of 200 drones, each costing a few thousand euros, that maths collapses. Spending €300,000 to intercept a €3,000 drone is a countdown to running out of ammunition.
This is the gap the startups are targeting. If Frankenburg or Tytan can produce an effective interceptor for a fraction of the legacy price, the economics of air defence change entirely. European governments would not need to choose between protecting a city and protecting a military base. They could afford to do both.
What comes next
The EIF-backed Defence Equity Facility, which has already committed hundreds of millions to European defence and dual-use funds, is adding fuel to the pipeline. The EU's 2026 European Defence Fund has earmarked half its billion-euro budget for major capabilities, including development of an EU interceptor. Government money is following the venture money.
For job seekers watching this space, the hiring signals are already visible. Frankenburg has four open roles and is recruiting across engineering and operations as it sets up its new production facilities. Tytan is scaling its team in Munich and beyond. Across our database of 421 European defence tech companies, air defence is becoming one of the fastest-growing hiring categories. You can browse open positions across the sector in our jobs directory.
Whether these startups can get interceptors off production lines and into the hands of European militaries before the next conflict makes the need undeniable will matter more than any fundraising headline.
