Venture Capital Surge Reshapes Europe’s Defense Technology Ecosystem

On 4 September 2025, Reuters reported that venture capital investment in European defense startups reached a record $5.2 billion in 2024, more than five times the level recorded between 2018 and 2020. The surge is directly linked to the war in Ukraine and NATO’s accelerated defense spending, which have created unprecedented demand for technologies with both civilian and military applications. Data from the NATO Innovation Fund, McKinsey and Dealroom illustrate how institutional capital is increasingly directed toward firms developing dual-use solutions in artificial intelligence, robotics, missile systems, space technologies, and advanced sensors. This transformation marks a structural change in Europe’s financial landscape, where defense—once a marginal theme for venture investors—is now recognized as a strategic growth sector. The trend also reflects policymakers’ efforts to connect private capital to Europe’s defense industrial base, strengthening resilience and reducing dependence on non-allied suppliers.