Wars in Ukraine and the Gulf have turned defence technology into 2026’s most sought-after venture bet. Defence startups raised $12.3 billion from VC funds in the first half of the year alone — almost double the same period in 2025 and already exceeding the entire prior year total of $9.95 billion. The money is flowing faster than any previous cycle. More significantly, it is flowing differently.
The Numbers Behind the Shift
The figures come from PitchBook data compiled for the Financial Times. American startups captured $11.4 billion of the $12.3 billion total — with Anduril Industries alone accounting for nearly half after a $5 billion round that pushed its valuation to $61 billion. Other major US beneficiaries include Saronic Technologies, which builds autonomous surface vessels, and Shield AI, a maker of aerial drones.
Europe accounts for a smaller share of the total but registers the faster directional change. European defence tech investment rose from around €200 million in 2021 to €2.6 billion in 2025, according to McKinsey — a 13x increase in four years. Total global defence VC reached $49.1 billion in 2025, nearly double the $27.2 billion recorded in 2024. JPMorgan’s head of security and resiliency for EMEA described the moment as “the most important change in the way wars are being fought arguably ever.” That framing is coming from a bank, not a general.
Europe’s Own Cohort
Three European companies illustrate where the continent’s defence capital is concentrating. Helsing, Munich’s AI defence startup founded in 2021, raised €600 million in June 2025 at a €12 billion valuation led by Spotify founder Daniel Ek’s Prima Materia fund. By May 2026, the company was reportedly nearing a further $1.2 billion raise at an $18 billion valuation, led by Dragoneer and Lightspeed — which would make it Germany’s most valuable startup by a significant margin.
Helsing now produces the HX-2 kamikaze drone, a 12-kilogram munition with onboard AI capable of operating in GPS-denied environments. The Bundestag approved an initial €269 million contract for HX-2, with a framework volume of up to €1.46 billion over seven years. On top of that, Helsing unveiled the CA-1 Europa, an unmanned combat aircraft, in September 2025. The company has simultaneously partnered with Saab, formed a space joint venture with OHB, and struck an agreement with EURENCO on sovereign European strike drone capability.
Stark Defence, founded by former Helsing co-founder Florian Seibel, focuses on attack drones and raised €500 million at pace. The German government announced a joint framework contract with Helsing and Stark capped at €2 billion. ICEYE, the Finnish synthetic aperture radar satellite company, raised €200 million at a €2.4 billion valuation in December 2025, led by General Catalyst with participation from Bpifrance and Polish state investors. ICEYE now plans to produce one satellite per week by 2026. Its joint venture with Rheinmetall expects €2 billion in orders within two quarters.
These aren’t speculative bets. These are companies with active battlefield deployments, government contracts, and multi-domain product portfolios.
When the State Returns Through Private Capital
The structural shift is clearest in how public money relates to private capital. The European Commission now runs an EU Defence Equity Facility through InvestEU, which puts EU funds directly into venture capital vehicles backing defence startups. The NATO Innovation Fund — a multi-sovereign VC fund backed by NATO member states — actively co-invests alongside commercial VCs.
This dissolves the traditional boundary between public procurement and private investment. In the old model, governments issued contracts and defence companies fulfilled them. In the emerging model, governments seed VC funds, which invest in startups, which then compete for government contracts. The state returns as a capital allocator embedded in the VC stack, rather than as a direct contractor.
As explored in Orbit Is Getting Crowded. Insurance Notices First, private actors are increasingly making decisions with national security implications — and institutions are adapting their own structures to influence those decisions without fully controlling them. Defence VC follows identical logic.
The Ethical Reset, Done Quietly
A decade ago, mainstream venture capital maintained clear distance from defence. Google’s Project Maven — a US military AI programme — triggered an internal employee revolt in 2018. Investor ethics frameworks often excluded weapons systems outright. That consensus has largely dissolved.
The number of VC firms actively investing in defence increased 41% in 2025. Firms that once cited ethical objections now frame defence investment as supporting democratic values in an era of authoritarian aggression. Daniel Ek, best known for founding Spotify, became chairman of Helsing. General Catalyst, known for healthcare and software investments, became one of Europe’s most prolific defence backers, sitting on both Helsing’s and ICEYE’s boards.
The ethical reframe is visible at the level of language. Startups in this space don’t describe themselves as weapons manufacturers. They describe themselves as sovereignty infrastructure providers. Helsing’s stated mission is protecting democratic societies through AI. ICEYE positions its satellites as tools for European strategic autonomy. The pitch is indistinguishable from geopolitical policy language — because it is geopolitical policy language, directed at investors rather than parliaments.
Capital as Strategic Doctrine
The implications extend beyond any individual company or funding round. What the $12.3 billion figure represents isn’t simply investor appetite for returns. It represents private capital markets internalising a strategic judgement: that the wars currently underway will reshape military technology for a generation, that the winners will be software-native companies rather than legacy defence primes, and that the window to establish position is now.
In that context, VC allocation is functioning as strategic doctrine — placing bets on which technologies, which countries, and which supply chains will matter when the current conflicts eventually end. The state hasn’t stepped back from defence. It has learned to work through venture capital, and venture capital has learned to think like a state.
Key Sources
- Financial Times / PitchBook – Wars Trigger $12bn Venture Capital Rush into Defence Tech
- Helsing – Series D €600M Announcement
- TechCrunch – Helsing Nears $1.2B Raise at $18B Valuation
- Bloomberg – Helsing, Isar, ICEYE: European Defense Tech Startups to Watch
- ICEYE / Bloomberg – ICEYE Raises €200M at €2.4B Valuation
- European Commission – InvestEU Defence Equity Facility
- Vestbee – European Defence Startups Raised $8.7B in 2025
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