European defence tech investment is on track to hit a record year in 2024, as it’s expected to reach $1 billion. This surge in investment is driven by governments turning to the defence tech sector to strengthen national security in response to escalating geopolitical instability.
According to a new Dealroom report, Europe is now at the heart of an investment surge in the defence tech sector. Over the past three years, defence tech startups and scaleups have raised $3 billion in venture capital. This growth is expected to continue, with the sector accounting for a significant share of the total European VC funding.
Germany, the UK, and France dominate investments in the defence tech sector, having captured 87% of the total funding. Germany has attracted the most investment, with Munich emerging as a major investment hub. The UK is also a significant player, with five locations making it to the top ten investment hubs.
NATO countries are also investing heavily in defence tech startups. The US holds the leading position, and venture capital investment among NATO countries has increased significantly since 2018. There are now 370 VC-backed startups in NATO countries, with a combined enterprise value of $161 billion.
Startups’ Critical Role in Defence Tech
Startups have a critical role to play in the defence tech sector, according to Jeannette zu Fürstenberg, managing director and head of Europe at VC firm General Catalyst. Their agility, speed, and deep technical expertise are essential in strengthening national security.