National governments are actively courting private capital and fostering public-private partnerships to support defence, blending institutional clout with market finance

The UK provides a prime example: in early April, the Ministry of Defence convened top European venture capital firms in London to encourage investment in British defence startups, explicitly branding defence as “an ethical investment… in our continent’s security”. This unprecedented meeting – attended by the UK Defence Minister and major VC funds – is part of a government strategy to unlock “billions of pounds” of private investment for defence tech. The British government is also offering co-investment and seed funding (through initiatives like the £10 million Defence Technology Explainer fund) to draw VCs into dual-use technologies. Similarly, France’s public investment bank Bpifrance operates a dedicated defence innovation fund (“DefInvest”) that takes stakes in startups alongside private venture investors, and has launched accelerator programs for defence SMEs. Such efforts are often paired with regulatory tweaks – e.g., the UK clarified that its pension trustees can invest in defence without breaching ESG duties, and is exploring tax incentives for investments in domestic defence companies. The logic here is leveraging institutional support to amplify private finance: every £1 of public money can crowd-in several ££ of private money if structured attractively. It also injects the dynamism of the private sector into defence, which governments hope will spur faster innovation (in areas like cybersecurity, drones, space tech) than traditional procurement can. Market sentiment has been sufficiently swayed that large institutional investors (pension funds, insurance) are warming to these ideas – for instance, some UK pension managers are reassessing longstanding defence exclusions after direct urging from MPs to support the sector. On the partnership front, governments are loosening IP and classification rules to allow civilian tech firms to collaborate on defence projects more easily, and setting up “innovation hubs” (NATO has DIANA, and many countries have similar) that connect military end-users with startups. In essence, institutional initiatives now go beyond just spending and into facilitating an ecosystem: regulators, the military, academia, and private investors are being linked together. This holistic approach is relatively new in Europe and is borne from the recognition that future wars will be won as much by Silicon Valley-style innovation as by traditional arsenals. The immediate beneficiary is the defence sector’s access to capital (financial and human capital), which is being actively expanded through these government-brokered channels.