In a Near Future Defense Revolution, European VCs Pour Funds into Startups Specialising in Emerging Military Tech

Venture Capitalists (VCs) were once hesitant to dabble in the controversial realm of defense technology, but by the year 2025, the European investment landscape is witnessing a stark shift. The defense market is buzzing with potential as the continent seeks to amplify its spending and technologically enhance its armament.

More VCs are now either raising defense-oriented funds or directing a portion of their existing assets to support startups focusing on maritime to autonomous drone technology and advanced weapons tech. The sector is starting to attract substantial investment. To underscore this, German Quantum Systems and Portuguese Tekever, both drone startups, gained unicorn status this year, while AI defense company Helsing collected €600m in funding, skyrocketing its valuation to €12bn — ranking it among Europe’s most esteemed startups.

Among these is D3HQ, a Kyiv-based fund specializing in early-stage defense startups. It launched in 2023 with a targeted fund size of $30m and primarily backs startups focused on military hardware and software capabilities. Another significant player is the Amsterdam-based NATO Innovation Fund (NIF), a €1bn fund backed by 24 NATO allies that invest in deeptech and defense startups in NATO member states.

Project A, a generalist VC firm in Berlin, has earned a reputation for its defense bets, like German autonomous robotics startup ARX Robotics and drone unicorn Quantum Systems. Other notable funds include Madrid-based 201 Ventures, which focuses on dual-use startups working areas such as maritime tech and high-precision manufacturing.

Despite the historical controversy surrounding defense technology, the zeal for investment is clear. As European defense-targeted startups thrive under this funding boom, the landscape is set for a new era of military tech.