European defense, security, and resilience startups raised a record $8.7B in 2025, up 55% YoY, with AI technologies accounting for 44% of total funding, according to Dealroom and NATO Innovation Fund.
European defense, security, and resilience startups achieved record funding of $8.7 billion in 2025, marking a 55% year-over-year increase, according to new data from Dealroom and the NATO Innovation Fund released ahead of the Munich Security Conference.
AI technologies dominated the investment landscape, accounting for 44% of total funding across the sector. This surge reflects growing recognition of artificial intelligence's critical role in modern defense capabilities, from autonomous systems to advanced threat detection and cybersecurity solutions.
The funding boom comes as European nations seek to bolster their defense capabilities amid ongoing geopolitical tensions and the need for technological sovereignty. The NATO Innovation Fund, established to support dual-use technologies that enhance both civilian and military applications, has been instrumental in channeling capital toward promising startups in this space.
Key areas attracting investment include:
- AI-powered surveillance and reconnaissance systems
- Autonomous defense platforms and robotics
- Advanced cybersecurity solutions for critical infrastructure
- Quantum computing applications for secure communications
- Biometric identification and border security technologies
The report highlights a maturation of the European defense tech ecosystem, with startups moving beyond early-stage development into scaling operations and commercialization. This growth trajectory contrasts with traditional defense contractors, offering NATO allies more agile and innovative solutions.
Several factors are driving this investment surge:
- Increased defense budgets across European nations following geopolitical shifts
- Strategic autonomy goals reducing reliance on non-European suppliers
- Dual-use technology opportunities bridging civilian and military applications
- Talent migration from traditional tech sectors to defense-focused startups
- Regulatory frameworks evolving to support defense innovation
The funding distribution shows particular strength in Northern and Western Europe, with the UK, France, and Germany leading investment activity. However, Eastern European startups are gaining traction, particularly in cybersecurity and border security solutions.
Notable funding rounds in 2025 included:
- AI-powered drone manufacturer securing $250M Series C
- Quantum cryptography startup raising $180M Series B
- Autonomous vehicle defense platform obtaining $150M Series A
- Advanced materials for military applications securing $120M funding
The NATO Innovation Fund's involvement has been crucial in de-risking investments and providing technical expertise to portfolio companies. The fund's focus on technologies with both civilian and military applications has helped bridge the gap between commercial viability and defense requirements.
Industry analysts note that this funding surge represents a fundamental shift in how European nations approach defense innovation. Rather than relying solely on traditional defense contractors, governments are increasingly partnering with agile startups capable of rapid development and deployment of cutting-edge technologies.
Looking ahead, the report projects continued growth in 2026, with AI and quantum technologies expected to dominate investment priorities. The convergence of commercial and defense applications is likely to accelerate, creating new opportunities for cross-sector collaboration and innovation.
The record funding also reflects broader trends in the global defense technology landscape, where AI capabilities are increasingly viewed as essential for maintaining strategic advantages. European startups are positioning themselves to compete with US and Asian counterparts in developing next-generation defense technologies.
This investment boom comes at a critical time as NATO allies work to modernize their capabilities and address emerging threats ranging from cyber warfare to autonomous weapons systems. The success of European defense tech startups in attracting significant capital suggests a vibrant ecosystem capable of meeting these challenges.
As the Munich Security Conference approaches, the data underscores the growing importance of technology and innovation in shaping European defense strategy. The record funding levels indicate strong confidence in the sector's ability to deliver transformative solutions for modern security challenges.
The 55% YoY growth rate and AI's 44% share of funding highlight a sector in rapid evolution, with European startups increasingly recognized as key players in the global defense technology landscape. This trend is likely to continue as geopolitical tensions persist and technological capabilities become ever more central to national security strategies.
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