The State of Defence Tech 2025 report reveals a dynamic yet uneven landscape in European defence innovation, highlighting both strengths and critical vulnerabilities that could shape the continent’s strategic future. While Europe leads in venture capital (VC) investment for sectors like quantum technology, it lags significantly in spacetech and AI chips—two areas identified as pivotal for global security and resilience.
The UK’s military heritage is playing a defining role in Europe’s defence tech boom. The report shows that one in seven defence tech founders has experience in the armed forces or the Ministry of Defence (MoD), with the UK leading the way at 30 founders. This influence extends to the boardroom, where over 12% of C-level executives in European defence startups have military or MoD backgrounds, with the UK again taking the lead at 41 such leaders—more than double that of France, the next most represented nation.
The report was unveiled at the Resilience Conference in London, a gathering of key defence tech figures focused on the future of the battlefield, autonomy, VC investment in kinetic weapons, post-quantum cryptography, supply chains, and manufacturing. The conference brings together leaders from NATO, Ukraine, the military, venture capital, and startups, underscoring the growing intersection of private and public sector interests in defence innovation.
Record-Breaking Investment and Growing Blindspots
The defence tech sector in Europe is experiencing unprecedented growth, with VC investment reaching $1.5 billion in 2025—the most active year on record. Mega rounds, such as the €600 million ($698.5 million) funding raised by German defence startup Helsing in June, have driven much of this surge. The number of unique investors in European defence is projected to have quadrupled since 2019, with EU countries contributing an increasing share of this investment.
Defence tech now accounts for 6.2% of total European VC funding, a dramatic rise from less than 1% before 2020. This growth reflects heightened global security concerns, particularly since Russia’s full-scale invasion of Ukraine in 2022. However, despite this momentum, Europe’s defence tech sector faces critical blindspots. Only 12% of global VC investment in space launch vehicles and 6% in AI chips and processors came from Europe between 2022 and 2025. The UK and France have recognised this vulnerability and are collaborating with US semiconductor giants to scale up AI infrastructure.
In contrast, Europe dominates VC funding in quantum cryptography, contributing 88% of the total. This disparity highlights the need for strategic investment in areas where Europe is underrepresented, particularly in spacetech and AI-driven defence systems.
Regional Hotspots and Strategic Priorities
The report identifies Germany as the leading European hub for defence tech investment, largely due to Helsing’s outsized funding round. Munich tops the list of European cities, followed by London and Paris. The UK’s strong presence is further reflected in its four cities ranking among the top ten defence tech hubs, demonstrating the country’s breadth of activity without a single dominant city.
Emerging clusters in Lisbon and Madrid are also attracting growing investment, signalling a broader geographic distribution of defence tech innovation across the continent. However, the report warns that Europe must act decisively to address critical vulnerabilities in spacetech and AI chips, which are essential for sovereignty and resilience.
Khaled Helioui, partner at Plural, emphasised the urgency of this challenge: “Europe needs to address the critical areas in its defence tech sector where it has serious vulnerabilities. Space and applications of AI are new frontiers for defence technology that will define our sovereignty, resilience and ability to compete. The window to act is narrow, and if we do not invest with the ambition and decisiveness that the challenges we are facing require, Europe will remain dependent on others for the technologies that will shape the future of security and pursue its predicted obsolescence.”
Jan-Hendrik Boelens, founder and CEO of Alpine Eagle, echoed this sentiment: “Europe has the talent, research depth and industrial heritage to lead in the technologies that matter most for security and resilience. However, leadership does not happen by accident; it requires a long-term commitment to both capital and execution. Space, AI chips and advanced systems are not just future markets; they are the backbone of sovereignty. If we want Europe to be secure and competitive, we must turn today’s momentum in defence tech into sustained leadership across the entire innovation chain.”
Tobias Stone, co-founder of Resilience Media, highlighted the broader implications of this investment: “We are glad to see more investors embracing defence and security. This is necessary to ensure our democracies are properly defended. Ukraine has shown how important startups are in a fast-moving conflict because they can innovate far more quickly