The Changing Landscape of Defense Tech Investments
We live in a very different world since the Russian invasion of Ukraine in 2022 and Hamas’s Oct. 7 attack on Israel. In a time where global military expenditure reached $2.4 trillion last year, startups are seizing the opportunity to carve out their share of the market, with investors now more willing than ever to support them.
The United States leads the way in defense spending, with contracts worth $53 billion awarded to major tech firms between 2019 and 2022. However, the trend of investing in defense technology is not limited to the U.S. alone.
Investor Interest in Defense Tech
Amidst this shifting landscape, German-based AI startup Helsing serves as a prime example of tech companies tapping into the vast capital available for military applications. Investors are particularly keen on tech solutions with dual-use potential, capable of serving both civilian and military purposes. This concept of “resilience tech” is gaining traction as a means to strengthen democratic societies against threats.
Helsing’s co-CEO, Gundbert Scherf, highlighted the company’s mission to leverage AI in protecting democratic values, a sentiment echoed by mainstream investors like Spotify founder Daniel Ek. This shift in mindset also extends to venture capital, as funds previously restricted from investing in weapons are now backing international startups focused on resilience tech.
Venture Capital Firms Embracing Resilience Tech
Across Europe and beyond, venture capital firms are venturing into resilience tech outside of the U.S., supporting startups in various sectors. Some notable players include:
NATO Innovation Fund
The NATO Innovation Fund has emerged as a key player in financing resilience tech. With a $1 billion fund, NIF invests in startups from its 24 member countries, focusing on advancing defense, security, and resilience through technologies like AI, space tech, and robotics.
OTB Ventures
OTB Ventures, a deep tech-focused firm, collaborates with NIF and the European Investment Fund to support startups in areas such as space tech, AI, cybersecurity, and fintech infrastructure. OTB recognizes the value of dual-use technologies and their applicability to defense.
MD One Ventures
MD One Ventures in the U.K. specializes in early-stage companies with a focus on applied deep tech innovation for national security and defense. Their diverse portfolio includes companies like Labrys Technologies and Materials Nexus, emphasizing dual-use technology.
Israel Resilience Fund
The Israel Resilience Fund, launched in response to security challenges, aims to invest in startups relevant to Israel’s needs. Backed by OurCrowd, the fund has seen significant success in supporting Israeli startups post-conflict.
D3
D3, known for its commitment to “Dare to Defend Democracy,” prioritizes investments in technologies that strengthen national security. With a focus on Ukraine and Western security, D3’s portfolio includes innovative solutions like drones, sensors, and AI-driven applications.
As the landscape of defense tech investments continues to evolve, these venture capital firms are at the forefront of driving innovation and resilience in an increasingly uncertain world.