In 2024, defense, security, and resilience (DSR) technology funding in Europe reached an unprecedented €5.2 billion, marking a 24% increase from the previous year. Germany emerged as the leading nation in securing DSR funding, followed closely by the United Kingdom and France. This surge signifies a growing commitment to bolstering technological advancements within the continent's defense sector. The European Commission, alongside the European Investment Fund (EIF), played a pivotal role by launching the €175 million Defence Equity Facility (DEF) in January 2024 to support this burgeoning field.
The need for updated policies became evident as the European Investment Bank (EIF's parent organization) revised its rules on dual-use technology to facilitate DEF operations. This development underscores the expanding scope of DSR, which extends beyond traditional defense technology to include supply chain innovations, quantum technologies, and energy solutions. Despite being a relatively nascent sector, DSR boasts an active pipeline of early-stage companies poised to drive future growth.
"Despite recent growth, defense, security, and resilience tech remains a relatively nascent sector, but the data shows an active pipeline of early-stage companies looking to change that," remarked Wijngaarde.
The NATO Innovation Fund (NIF), a €1 billion multi-country initiative, has also been instrumental in fueling the DSR landscape by making direct investments and backing funds within the space. Recently, NIF appointed British Army veteran John Ridge as its chief adoption officer, signaling a strategic commitment to expanding its influence. The fund's portfolio includes startups like Portugal-based Tekever, which specializes in dual-use drone technology and successfully raised $74 million in a Series B round last November.
While pure defense technology constitutes a smaller subset of total funding, it is experiencing significant growth. A Dealroom report previously projected that defense tech funding could reach $1 billion in 2024. The war in Ukraine served as a pivotal moment for Europe, acting as a catalyst that heightened the urgency for increased investment in defense technology.
The DSR sector now accounts for one-third of all deep tech venture funding across Europe, reflecting an evolving investment landscape. A record number of investors—over 850—participated in at least one DSR deal last year, signaling heightened interest and confidence in the sector's potential. In 2024 alone, DSR startups secured $5.2 billion in venture capital, representing nearly five times the amount raised in 2019.
"Appetite for defense, security, and resilience startup investment is unrecognizable in Europe from just a few years ago," noted Yoram Wijngaarde.
Germany's contribution to the sector is underscored by AI defense tech company Helsing, which raised $487 million in a Series C round led by General Catalyst last year. This achievement highlights Germany’s leadership role within the European DSR market.
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