Key Takeaways
- • European defense, security, and resilience startups raised a record $8.7 billion in venture capital funding during 2025, representing a 55% increase year-over-year and nearly four times the 2020 total.
- • Late-stage funding surged to $4.7 billion in 2025 (more than triple the prior year), while early-stage and breakout-stage funding declined 10% and 13% respectively, signaling a shift toward mature-stage investment.
- • AI-backed defense startups dominated 2025 funding, accounting for 44% of all European defense, security, and resilience sector capital—the highest share in six years.
- • The UK led European defense venture funding in 2025 with $2.9 billion, followed by Germany ($2.1 billion), France ($869 million), and Finland ($636 million).
- • Through 2026, the sector has already deployed $4.9 billion across 92 funding rounds, compared to just $73 million across 9 rounds in 2018, reflecting explosive growth in a category that barely existed a decade ago.
Summary
European defense and resilience startups have achieved unprecedented funding momentum, with 2025 marking a watershed year for venture capital deployment in the sector. According to Dealroom analysis conducted in collaboration with the NATO Innovation Fund, the region's defense, security, and resilience startups raised $8.7 billion in 2025—a 55% surge from 2024 and nearly quadrupling the capital deployed in 2020. This acceleration underscores the European tech ecosystem's strategic pivot toward dual-use technologies and national security infrastructure.
The composition of 2025 funding reveals a pronounced shift toward later-stage deployment. Late-stage funding more than tripled to $4.7 billion, while early-stage venture capital declined 10% to $1.1 billion and breakout-stage funding fell 13% to $2.8 billion. This distribution suggests that previously venture-backed defense companies are maturing into established platforms, attracting larger institutional capital commitments while early-stage formation activity moderates.
Artificial intelligence emerged as the dominant technological driver, underpinning 44% of all European defense, security, and resilience funding in 2025—the highest concentration in six years and matching the previous peak set in 2020. Quantum computing and AI chips particularly catalyzed the capital influx, with startups in these categories raising 2.4 times more capital in 2025 compared to 2024.
Geographic concentration remains pronounced. The UK captured the largest share of European defense venture funding with $2.9 billion, trailed by Germany ($2.1 billion), France ($869 million), and Finland ($636 million in fourth place). Germany's ascendant role in defense-tech venture capital has accelerated notably through 2026, reflecting geopolitical imperatives and regional policy support. Exit activity also intensified, with 20 VC-backed M&A transactions completed in 2025—quadruple the 2021 count—though no public listings occurred during the period.
The sector's trajectory through 2026 maintains breakneck growth. Year-to-date funding has already reached $4.9 billion across 92 rounds, dwarfing the $73 million deployed across 9 rounds in 2018. This tenfold expansion in capital volume and deal velocity over eight years underscores the sector's transformation from niche to mainstream within European venture capital.
The composition of 2025 funding reveals a pronounced shift toward later-stage deployment. Late-stage funding more than tripled to $4.7 billion, while early-stage venture capital declined 10% to $1.1 billion and breakout-stage funding fell 13% to $2.8 billion. This distribution suggests that previously venture-backed defense companies are maturing into established platforms, attracting larger institutional capital commitments while early-stage formation activity moderates.
Artificial intelligence emerged as the dominant technological driver, underpinning 44% of all European defense, security, and resilience funding in 2025—the highest concentration in six years and matching the previous peak set in 2020. Quantum computing and AI chips particularly catalyzed the capital influx, with startups in these categories raising 2.4 times more capital in 2025 compared to 2024.
Geographic concentration remains pronounced. The UK captured the largest share of European defense venture funding with $2.9 billion, trailed by Germany ($2.1 billion), France ($869 million), and Finland ($636 million in fourth place). Germany's ascendant role in defense-tech venture capital has accelerated notably through 2026, reflecting geopolitical imperatives and regional policy support. Exit activity also intensified, with 20 VC-backed M&A transactions completed in 2025—quadruple the 2021 count—though no public listings occurred during the period.
The sector's trajectory through 2026 maintains breakneck growth. Year-to-date funding has already reached $4.9 billion across 92 rounds, dwarfing the $73 million deployed across 9 rounds in 2018. This tenfold expansion in capital volume and deal velocity over eight years underscores the sector's transformation from niche to mainstream within European venture capital.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.