The Capital Sovereignty Problem in European Defence-Tech
Who leads the growth round decides what European autonomy means
European defence-tech has crossed a structural threshold. The sector that European venture investors would not touch before 2020 is now, on the most cited industry measure, the fastest-growing vertical in European venture capital, with a record 8.7 billion dollars raised in 2025 according to Dealroom and the NATO Innovation Fund. Yet the same source attributes the surge primarily to late-stage mega-rounds, and a parallel industry estimate places United States investors at 40 to 50 per cent of the capital flowing into the sector, concentrated in precisely those larger growth cheques. The question this raises is not whether more capital is reaching European defence-tech — it plainly is — but whether the capital that finances the rounds in which valuation, governance, board influence and exit optionality are formed is itself European. Helsing makes the asymmetry visible: a 600 million euro Series D in 2025 led by a European investor, followed in 2026 by a 1.2 billion dollar round reported by the Financial Times to be led from the United States while leaving the company still around 80 per cent European-owned. Whether such a company is “sovereign” in any operative sense depends not on its headquarters or its cap-table majority, but on the governance terms of its growth financing, which are not publicly disclosed. That is the problem this report addresses.
The report proceeds in twelve sections. The first three establish the measurement frame: the real size and composition of the European defence-tech market on the two distinct Dealroom datasets, the analytical distinction between company nationality and capital nationality, and the precise scope of the United States capital problem at growth stage. Sections four and five examine the European public architecture — the European Investment Fund’s Defence Equity Facility under InvestEU and its cornerstone commitments to Keen Venture Partners and Join Capital Fund III, and the NATO Innovation Fund, whose limited-partner base notably excludes the United States, France and Canada. Sections six to nine examine the institutional and corporate evidence: limited-partner constraints and the Commission’s clarification that sustainable-finance rules do not prohibit defence; Helsing as the central test case; Quantum Systems as a counter-pattern of European-led growth financing paired with Ukrainian procurement; and Anduril as the benchmark for the depth of the United States capital market. Sections ten and eleven address the demand and regulatory sides — whether SAFE and EDIP can channel orders to scale-ups rather than to incumbent primes, and how the revised FDI screening framework distinguishes benign allied capital from controlling positions. Section twelve gives a disciplined strategic assessment, identifies the conditions under which United States capital is compatible with European autonomy, and names what would have to change for the growth-stage gap to be closed. Throughout, the evidentiary status of every numerical claim is flagged — official legal figure, institutional announcement, company-reported, industry estimate, or press-reported — so that readers can weigh the inference against the evidence.