Key Takeaways
- • PitchBook reports private equity growth investments in defense technology totaled $4 billion for January-September 2026, versus $500 million in 2024.
- • Defense PE growth deals rose from 15 in 2024 to 31 in 2025 and 48 by September 2026, with these transactions accounting for 41% of defense PE activity in 2026 against 3% in 2024.
- • Advent International set aside up to $1 billion in March for next-generation defense technology, committing to Shield AI and Saronic, and has deployed roughly three quarters of that commitment according to managing partner Shonnel Malani.
- • Malani warned of a "very big risk" of a bubble, citing "a lot of froth in the system," while Weinberg Capital Partners is avoiding early-stage defense startups in favor of profitable suppliers.
- • PitchBook counts 504 defense PE deals but only 101 exits since 2021, with 70% of 2026 exit value coming via IPOs, increasing dependence on public-market conditions.
Summary
Private equity is moving deeper into defense technology as rising military budgets and geopolitical tensions drive demand for autonomous drones, missile defense and satellite systems. According to PitchBook, PE growth investments in defense totaled $4 billion for January-September 2026, compared with $500 million in 2024, as traditional buyout firms move toward younger, faster-growing companies. Deal counts have grown steadily, from 15 in 2024 to 31 in 2025 and 48 by September 2026. Per the same PitchBook data, these deals represented 41% of defense PE activity by value in 2026, up from 3% in 2024.
The broader financing picture is also expanding. Dealroom and Resilience Media reported that startups in NATO and allied nations had secured $27.1 billion by September 2026, almost double the full-year 2025 total. Private equity and venture firms, sovereign wealth funds and family offices are all seeking greater exposure. White & Case polled 250 senior leaders at U.K. defense companies, and 97% said they planned to pursue significant external funding over the next 12 months. Partner Daniel Turgel of White & Case said private capital is now playing a critical role in financing defense technology companies.
Advent International illustrates the shift. In March, the firm set aside up to $1 billion for next-generation defense technology, committing funds to Shield AI and Saronic. Managing partner Shonnel Malani told CNBC that roughly three quarters of that commitment had been deployed. Malani said the firm prioritizes technologies with defined military applications already validated by customers over purely financial metrics. He also warned that more companies are being valued on technological potential rather than revenue, profit or order books, and that a pullback could follow if some firms fail to convert potential into commercial results. Advent has walked away from several deals where valuations became "silly."
Not all investors are following the same path. Lionel Mestre of Weinberg Capital Partners said the firm targets profitable defense suppliers with established products, customers and positive cash flow, avoiding early-stage startups. He noted that valuations of the smaller, established suppliers Weinberg pursues have not risen markedly, and he judged the rapidly evolving drone market premature for its buyout approach, adding, "This sector will have to consolidate anyway." Mestre also described a marked shift in how European institutional investors view defense, coinciding with President Donald Trump's return to the White House and demands that European countries boost military spending.
Exits remain a constraint. PitchBook counts 504 defense PE deals but only 101 exits since 2021, though those totals include add-on acquisitions and do not directly show how much invested capital is still awaiting exit. By September 2026, 70% of defense PE exit value came through IPOs, increasing reliance on public-market conditions. Malani noted some startups are rushing to list before reaching operational maturity for public-company life. Corridore of PitchBook, who pushed back on overheating concerns, argued that growing budgets, heavy ammunition use and new drone and counter-drone technology provide the steady revenue PE needs for long-term bets.
The broader financing picture is also expanding. Dealroom and Resilience Media reported that startups in NATO and allied nations had secured $27.1 billion by September 2026, almost double the full-year 2025 total. Private equity and venture firms, sovereign wealth funds and family offices are all seeking greater exposure. White & Case polled 250 senior leaders at U.K. defense companies, and 97% said they planned to pursue significant external funding over the next 12 months. Partner Daniel Turgel of White & Case said private capital is now playing a critical role in financing defense technology companies.
Advent International illustrates the shift. In March, the firm set aside up to $1 billion for next-generation defense technology, committing funds to Shield AI and Saronic. Managing partner Shonnel Malani told CNBC that roughly three quarters of that commitment had been deployed. Malani said the firm prioritizes technologies with defined military applications already validated by customers over purely financial metrics. He also warned that more companies are being valued on technological potential rather than revenue, profit or order books, and that a pullback could follow if some firms fail to convert potential into commercial results. Advent has walked away from several deals where valuations became "silly."
Not all investors are following the same path. Lionel Mestre of Weinberg Capital Partners said the firm targets profitable defense suppliers with established products, customers and positive cash flow, avoiding early-stage startups. He noted that valuations of the smaller, established suppliers Weinberg pursues have not risen markedly, and he judged the rapidly evolving drone market premature for its buyout approach, adding, "This sector will have to consolidate anyway." Mestre also described a marked shift in how European institutional investors view defense, coinciding with President Donald Trump's return to the White House and demands that European countries boost military spending.
Exits remain a constraint. PitchBook counts 504 defense PE deals but only 101 exits since 2021, though those totals include add-on acquisitions and do not directly show how much invested capital is still awaiting exit. By September 2026, 70% of defense PE exit value came through IPOs, increasing reliance on public-market conditions. Malani noted some startups are rushing to list before reaching operational maturity for public-company life. Corridore of PitchBook, who pushed back on overheating concerns, argued that growing budgets, heavy ammunition use and new drone and counter-drone technology provide the steady revenue PE needs for long-term bets.
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