European defence technology startups have raised a record $7.4 billion in venture capital so far in 2026, nearly three times the $2.6 billion raised across the whole of 2025, according to Dealroom and Resilience Media.
The figures are contained in The State of Defence Tech 2026, which projects European defence-tech investment could reach $10.5 billion by the end of the year if current activity continues.
The report also records a marked increase in US involvement in European defence technology companies. American investors now account for 47 per cent of European defence-tech funding, compared with 17 per cent in 2020.
Much of the increase in investment has been concentrated in large funding rounds. Dealroom and Resilience Media said so-called mega-rounds, including Helsing’s $1.8 billion Series E, account for more than 85 per cent of European defence-tech funding recorded so far this year.
Across NATO members and allied countries, seven funding rounds of at least $1 billion have involved Anduril, Helsing, Saronic, Shield AI, Quantum Systems, ICEYE and Castelion. Defence startups across NATO countries have raised $27.1 billion in venture capital during 2026, around 1.9 times the amount raised during the whole of 2025.
Defence technology now accounts for 11.1 per cent of European venture capital investment, according to the report, rising to 15 per cent when considering the 27 European Union member states.
The pool of investors participating in the sector is also expanding. Dealroom identified 455 investors involved in at least one European defence deal during 2026 to date, compared with 408 during 2025 and 114 in 2020.
Specialist defence investment funds participated in 25 per cent of European defence funding rounds this year, up from 18 per cent in 2025 and 12 per cent in 2024. The report said private equity, project finance, debt and grants contributed a further $2.4 billion to defence companies across NATO and allied countries during 2025.
Germany is currently the largest European market for defence-tech venture funding, driven in part by investment in Helsing, Quantum Systems and Stark. German startups have raised $3.5 billion during 2026 and $5.9 billion since 2020, while Munich is identified in the report as Europe’s leading defence-technology hub.
According to a news update accompanying the report, Leslie Hitchcock, co-founder and publisher of Resilience Media, said: “National security, defence and technological innovation are now inseparable. Across NATO alliance countries, there is an urgent need to strengthen the infrastructure underpinning our collective security and resilience. For Europe, technological sovereignty must mean building together in the face of common threats.”
She added: “This is both a strategic imperative and a major economic opportunity: to build companies that protect peace and democracy while transforming defence, cybersecurity, energy and other critical infrastructure.”
US investors have become increasingly prominent within that European market. The report identifies Axon, Accel, Founders Fund, Y Combinator, General Catalyst and Lightspeed among the most active American investors in European defence technology during 2025 and 2026.
Among European investors, the NATO Innovation Fund recorded 12 defence-tech funding round participations since 2025, while Lakestar recorded ten, making them the two most active investors identified in the report over that period.
Klaus Hommels, Founder and Chairman of Lakestar, said: “Europe’s military leaders have been clear with us: if we want to build and retain critical defence capabilities in Europe, we also need sovereign European financing. The demand for these technologies is there and now the capital must follow. This record investment shows that Europe is beginning to recognise defence technology as a strategic necessity, not a passing investment trend.”
Despite the increase in funding, the report identifies areas where European companies remain behind global competitors. It describes Europe as relatively strong in quantum technology, photonics, space and drones, while identifying gaps in areas including AI chips and processors, launch vehicles, humanoid systems and communications satellites.
European quantum startups alone have raised $2.1 billion so far in 2026, with investment projected to reach $2.9 billion by the end of the year.
The value of European venture-backed defence startups has reached a combined $44 billion, according to the report, with companies founded since 2020 accounting for 77 per cent of that total.
Exit activity is also expected to increase. Across NATO and allied countries, defence-tech exits are projected to rise to 31 during 2026, compared with an annual average of around eight between 2021 and 2024. Exit value reached $18.6 billion during 2025, although the report said activity remained heavily concentrated in the United States.
The study also examined the movement of personnel between government, the military and the defence technology investment sector. Sixteen per cent of commercial leaders at European defence-tech companies were found to have military or defence ministry experience, while the proportion rises to 34 per cent among investors working at specialist defence funds.
Harry Mead, co-founder and CEO of Augur, said: “It’s reassuring to see European investment responding to the current threat environment. But this isn’t turning into deployed capability fast enough. The enemy are at the gates: Europe can’t afford to wait for new systems and legislation.”
“Our adversaries know this and are adept at exploiting the lag between identifying the problem, funding a solution and deploying it. We already have the infrastructure. What we urgently need is to make our sensors and systems more intelligent, so that operators can always stay a step ahead of our adversaries.”
The report is being presented at the Resilience Conference in London on 5 October, bringing together defence technology companies, investors and military and government representatives from the UK, NATO, Ukraine and other European countries.
