As Ukraine Inspires Defence-Tech Investment Surge, Startups Re-evaluate Military Applications

Three years following Russia’s full-scale invasion of Ukraine, the conflict has resculpted Europe’s defence tech industry, drawing heavy investment and encouraging tech companies to consider military applications. Technologies originally suited for disruption like autonomous drones and battlefield robots have seen capital swells. Investment in European ‘defence, security and resilience’ tech peaked at a record $5.2 billion in 2024, according to Dealroom data and the NATO Innovation Fund. Where previously most venture capitalists avoided defence investments, the Ukrainian conflict has shifted perceptions.

The founder of the UK-Ukraine TechExchange, Andriy Dovbenko, likens venture capitalists’ formerly squeamish approach to defence to the misgivings typically associated with ‘sin stocks’ like tobacco or pornography. The war altered this sentiment, as more investors opted to support Ukraine’s war effort, moving past previous stigmas.

As global interest swells, startups are exploring how their tech can be adapted for military applications. Companies such as French AI firm Mistral and German autonomous trucking company Fernride are considering how tech might operate on the battlefield. This trend is being referred to as the ‘reverse Palantir effect’, as companies transition from commercial innovation towards defence applications—a significant shift from the norm.

This shift isn’t confined to established tech businesses—emerging founders also express an increased interest in the defence sector. Perceptions of working in defence are changing, signalling potentially transformative developments for the defence tech industry in Europe.