Inaugural Dealroom and NATO Innovation Fund Report Reveals Record-Breaking Investing in Startups in European Defence, Security, and Resilience Sector

Dealroom.co and the NATO Innovation Fund - a €1 billion VC (Venture Capital) backed by 24 NATO countries – published today their inaugural report on the state of Defence, Security and Resilience in Europe, revealing a record-breaking year for investing in this segment. This highlights the critical role that the sector is playing in maintaining Europe’s technological edge and sovereignty amidst a broader market downturn.

Key findings from the report reveal:

1. VC funding in the DSR (defence, security and resilience) sector is at an all-time high, reaching $5.2 billion in 2024. Overall, investing is up nearly 5x in the last six years. With companies in early and breakout stages driving this growth, a strong pipeline to scaling is expected in the coming years.
2. DSR investing has increased by 30 percent over the past two years - the strongest growth among all VC deep tech segments. The segment has significantly outperformed the overall VC market, which witnessed a 45 percent decline in the same period of time.
3. Defence startups have been leading in the segment’s growth. Companies developing technologies for Awareness, Understanding, and Decision Making – this includes technologies that help track risks and threats to enable faster and better decisions - have seen VC funding soar to a record $1 billion in 2024, up 4x since 2020 and nearly 2x since last year.

“Appetite for defence, security and resilience startup investment is unrecognisable in Europe from just a few years ago,” said Yoram Wijngaarde, Founder and CEO of Dealroom. “While overall VC funding contracted by 45 percent in the past two years, defence and security tech investment has grown by 30 percent to reach $5.2 billion last year. It follows an ongoing trend of putting capital and innovation to work on Europe's core strategic needs, via deep technologies. Despite recent growth, defence, security and resilience tech remains a relatively nascent sector, but the data shows an active pipeline of early-stage companies looking to change that.”

“Europe has the talent and resources to become a global leader in technologies for Defence, Security and Resilience,” said Kelly Chen, Partner at the NATO Innovation Fund. “We're excited to see this sector drive the momentum in Deep Tech this year and are committed to investing in technologies that can secure the region's future.”

Germany and the UK are emerging as regional leaders

1. Munich emerged as Europe's top hub for DSR investment, followed by Oxford in the UK and Paris in France.
2. The UK has attracted the most VC funding in DSR since 2019. However, Germany claimed the top spot in 2024, followed by the UK and France.
3. Since 2019, Switzerland and the Netherlands have invested 7 percent of their total national VC funding in DSR companies. That marks the largest share of national funding invested in this segment.
4. The UK boasts five of the top ten DSR hubs (Oxford, London, Cambridge, Bristol, and Reading), while Germany follows with two (Munich, Berlin).

“The Munich metropolitan region is becoming a hub for next-generation defence companies, offering industrial and testing facilities, top talent, a regional industrial supply chain, and connections to German defence customers and traditional primes,” said Marc Wietfeld, Co-Founder & CEO, ARX. “With ARX, we aim to bridge the gap between emerging players, new defence primes, and established contractors.”

Laying the foundation for technological adoption in Europe

The report’s findings indicate that Europe's emerging tech landscape is undergoing a significant transformation in the defence, security and resilience space, driven by geopolitical developments and a growing demand for emerging technologies that can secure the region’s future. In a recently released paper, the NATO Innovation Fund called for the creation of adoption pathways for the integration of emerging technologies in the defence and security infrastructure of European ministries of defence.

To help support with the creation of these pathways, as well as in order to connect large European businesses with startup founders who have developed deep tech solutions that can help the region maintain its technological edge for generations to come, the NATO Innovation Fund is announcing today the hiring of John Ridge as Chief Adoption Officer.

John joins the NATO Innovation Fund after spending nearly three decades in the UK’s Armed Forces and Civil Service. He is also a Commissioner on the Atlantic Council’s current Commission on Software-Defined Warfare.

“I am extremely proud to be joining the NATO Innovation Fund to help get the cutting-edge capabilities of our portfolio companies into the hands of users across the Alliance,” said John Ridge, Chief Adoption Officer, NATO Innovation Fund. “I look forward to working hand-in-hand with NATO, national governments and defence industry leaders to help the technologies that we are backing make a difference to the Alliance's ability to deter further aggression by our adversaries.”

About the NATO Innovation Fund:

The NATO Innovation Fund is a €1 billion venture capital fund, backed by 24 NATO Allies, that invests in deep tech to address challenges in defence, security, and resilience. The fund invests independently, with 24 nations supporting its portfolio’s success and helping provide deep tech entrepreneurs with access to both commercial and government markets.

Participating NATO Allies are: Belgium; Bulgaria; Czechia; Denmark; Estonia; Finland; Germany; Greece; Hungary; Iceland; Italy; Latvia; Lithuania; Luxembourg; Netherlands; Norway; Poland; Portugal; Romania; Slovakia; Spain; Sweden; Türkiye; United Kingdom.

About Dealroom.co:

Dealroom.co is a global intelligence platform for discovering and tracking the most promising companies, technologies and ecosystems. Clients include many of the world’s foremost organizations such as Sequoia, Accel, Index Ventures, NATO Innovation Fund, Nato Diana, ESA, McKinsey, BCG, Deloitte, Google, AWS, Microsoft, Stripe.

Dealroom partners closely with local tech ecosystem development agencies and enablers, to create a comprehensive multi-dimensional blueprint of the tech ecosystem, including capital, talent, innovation, entrepreneurship and overall economic dynamism.

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