Welcome to our DefenceTech Continuum and Investor List Update!

The landscape of DefenceTech investment has evolved significantly since we introduced the first continuum two years ago. What was once a niche sector has grown into an important domain within the VC ecosystem.

Across Europe, we’ve seen progress: The European Commission has introduced its first European defence industrial strategy while launching funding initiatives for dual-use research through the successor to 'Horizon Europe'. Meanwhile, the EIB has expanded its investment mandate to include critical defence projects, which has encouraged European VC funds to increase investing in DefenceTech across the continent.

With this increased institutional support and investor interest, we’re presenting the Project A DefenceTech continuum 2.0 and an updated European Resilience & DefenceTech Investor List that highlights the growing focus on defence investments.

Yours,
Uwe, Jack and Jannic

How European VCs can navigate DefenceTech Investing

Defence investing has transformed from a niche pursuit to one of venture capital’s most discussed areas. For many investors, particularly in Germany and Europe, questions persist about navigating this space: What is possible within existing regulations? Where do we draw the line between dual-use and purely military applications?

Our updated continuum 2.0 provides deeper insights into the regulatory landscape across different categories, offering investors clarity on where the real opportunities lie. For generalist venture funds entering the DefenceTech space, this guide illuminates feasible investment pathways without crossing regulatory or ESG boundaries.

Our investment parameters remain focused on six key criteria: (1) the technology involved, (2) primary users, (3) potential exit scenarios, (4) whether the technology deals with weapons or ammunition (which remains outside our investment scope), (5) applicable special laws or export regulations, and (6) ESG considerations that must be factored into investment decisions.

This updated framework reflects the evolving regulatory landscape and provides clearer guidance on where generalist VCs can participate most effectively in building Europe’s defence capabilities.

The DefenceTech Gap: Challenges and Opportunities

Despite notable growth, European DefenceTech startups captured a mere 1.8% of Europe’s total venture capital funding in 2024. This underrepresentation isn’t simply about capital – it reflects deeper barriers. Many individuals in deep-tech and engineering fields still view military applications as “off limits”, constraining both company formation and the available talent pool.

Shifting this paradigm requires reframing defence innovation as central to European security and sovereignty. Public institutions must examine both explicit and implicit constraints inhibiting defence-relevant research and its funding. Such changes would not only expand the research foundation available for industrialisation but also signal institutional support for these critical efforts.

Despite growing momentum in Europe, a significant gap remains between the European and US DefenceTech ecosystems. The US benefits from a long-established culture of collaboration between startups, venture capital, and the Department of Defence, supported by dedicated programmes like DIU and AFWERX that actively fund and scale emerging technologies.

While early-stage funding has grown in Europe, later stages show a marked difference. As Figure 2 shows, US investors dominate larger rounds, providing over 60% of capital in funding rounds exceeding $200 million. European startups consistently report finding it easier to secure substantial funding from US investors than European ones. Additionally, despite existing European defence innovation structures, limited budgets often prevent startups from securing the contracts essential for growth. European nations need to strengthen their support mechanisms to help defence innovators scale beyond initial funding stages.

National Investment Initiatives: Building Defence Ecosystems

Emerging national investment vehicles are becoming critical enablers for defence technology development. The SmartCap Defence Fund in Estonia exemplifies this approach. SmartCap, already an LP in the NATO Innovation Fund, recently launched a €100m defence fund aiming to improve defence capabilities in Estonia and NATO. The fund will back funds outside Estonia, as long as they have a presence in the country or are dedicated to building up the Estonian ecosystem.

The SmartCap Defence Fund’s principal objective is to strengthen the Estonian defence industry and advance innovative defence and security capabilities to address the growing global demand for new solutions. For this purpose, investments will be made in companies producing or developing products or technologies, or providing sector-specific services either exclusively for military use, or for dual-use applications that can serve both civilian and military purposes.

The fund strengthens Estonia’s defence industry while contributing to the broader European DefenceTech ecosystem. By requiring investments into companies established and operating in Estonia – while allowing limited investments in other NATO member countries – the fund creates connections within Estonia’s defence ecosystem while fostering international collaboration.

SmartCap Defence Fund represents an interesting model to scale across the EU. This initiative demonstrates how targeted public investment can catalyse innovation in critical defence technologies while building robust national capabilities. By replicating and adapting this approach, Europe can accelerate technological advancement, enhance interoperability, and build a more resilient continental defence ecosystem capable of addressing emerging threats. 

DefenceTech Investor Landscape

While public investment vehicles provide critical institutional support, private capital has been equally instrumental for the DefenceTech investment landscape in the past years and we’re excited to share remarkable growth in our DefenceTech Investor List. What began in March 2024 with 44 active investors has now expanded to 127 VCs interested in investing in Resilience and DefenceTech, representing a 3x growth in interest in just 12 months.

This substantial growth reflects the increasing recognition of national security initiatives across Germany and Europe. With more founders than ever building in European Resilience and DefenceTech, this expanded list serves as an invaluable resource for entrepreneurs navigating the funding landscape.

For both startups and investors in the DefenceTech sector, important considerations remain. The state continues to play a central role: if governments truly wish to enable innovation, they must create opportunities for young companies and streamline procurement processes to allow new entrants to compete effectively.

Germany’s recent €500 billion commitment to infrastructure and defence presents a historic opportunity to strengthen European deterrence through technology. To maximise its impact, these investments should target both established industry and innovative startups while fostering strategic partnerships between emerging companies and traditional manufacturers. The recent Daimler Truck-ARX Robotics partnership exemplifies this model, combining established manufacturing expertise with cutting-edge AI capabilities for military vehicles. Such collaborations not only enhance immediate capabilities but ensure pioneering technologies become the foundation of Europe’s future security framework.

We invite our community to continue contributing to this resource, highlighting any updates or additions to keep the investor list current and comprehensive. You can access the latest version here.

Sources and further reading

• European defence tech startups: In it for the long run?

• Meet the LP which won’t back VCs unless they can back weapons

• SmartCap Defence Fund

News That Caught Our Attention 👀

• Germany may soon co-finance European nuclear deterrence, signalling a bold shift in its defence policy amid growing concerns over US reliability.
  Defense News

• ​Isar Aerospace, a Munich-based startup, achieved a significant milestone by successfully launching Europe’s first privately developed orbital rocket from Norway’s Andøya Spaceport. StartupValley

• ​Germany is embarking on a significant military expansion, allocating substantial funds to enhance the Bundeswehr’s capabilities, including investments in advanced weaponry, drones, infrastructure, and personnel. Deutsche Welle

• China has launched massive live-fire military drills around Taiwan, escalating tensions and drawing sharp international warnings about regional security. CNN

Featured Jobs 👷

Every week we feature a list of interesting roles in European DefenceTech startups and scale-ups for readers seeking their next challenge in their careers.

• TYTAN Technologies: Governmental Affairs & Business Development Manager (Berlin or Munich)

• Quantum Systems: Platform Engineer (Gilching)

• Labrys Technologies: Senior Product Designer (London)

• Kraken Technologies: Marine Engineer (Southampton)

If you are a founder and would like to promote your open roles, please get in touch with us!

Passionate and want to contribute? 👩🏻‍💻

The European Resilience Tech Newsletter is always looking for regular and guest authors, writers, reporters, content creators etc. If you like what you read, you are passionate about improving European resilience regardless of your background and want to contribute, just reach out to us!

European Resilience Tech Newsletter Team

Uwe Horstmann co-founded Project A Ventures in 2012 as General Partner and has built Project A to be a leading European early-stage investor with over $1bn USD under management and having backed 100+ founders. In addition to Project A, Uwe serves as Reserve Officer in the German armed forces and advises the German Ministry of Defence in digital transformation issues.

Jack Wang is a software engineer turned product-driven tech investor and joined Project A in 2021 to lead the firm’s deep tech investing, which has grown to include DefenceTech. Prior to joining Project A, Jack worked in a variety of organisations such as Amazon and Macquarie Group across Australia, US and UK / Europe. Jack holds a MBA from London Business School and Bachelors of Engineering (Bioinformatics, 1st) from UNSW, Australia.

Jannic Meyer joined Project A initially contributing to what is now known as the Project A Studio, partnering with founders at the pre-idea stage, where he covered a variety of topics ranging from energy infrastructure to dual-use robotics and led our investment in ARX Robotics. He is now part of the investment team at Project A covering all things resilience.

Project A Ventures is one of the leading early-stage tech investors in Europe with offices in Berlin and London. In addition to 1 billion USD assets under management, Project A supports its 100+ portfolio companies with a platform team over 140 functional experts in key areas such as software and product development, business intelligence, brand, design, marketing, sales and recruiting. Project A have backed founders of Trade Republic, WorldRemit, Sennder, KRY, Spryker, Catawiki, Unmind and Voi as well as founders building in European Resilience: