FCF Fox Corporate Finance GmbH is pleased to publish the "DefenseTech Venture Capital Report - 2026".
The report is part of the "FCF DeepTech Series", a quarterly series of analyses tracking European venture capital funding trends in four key DeepTech sectors.

Strong growth in the DefenseTech VC market

Since the start of the Ukraine-Russia war in 2022, the European DefenseTech VC market has seen significant growth. In 2025, 154 deals with a total investment volume of €2.8 billion were registered (+148% deals and +718% volume compared to 2021). This corresponds to a compound annual growth rate (CAGR) of +69% in the period 2021-2025. Growth was primarily driven by mega deals and a significant increase in average deal sizes.

Germany among the leading markets

Germany ranks first in the European DefenseTech VC market by invested capital with 42% (€ 2.2 billion) and third by number of transactions with 14% (65 deals). The high proportion of undisclosed deal sizes is likely to underestimate the actual volume share. Together with the UK and France, these three countries account for 62% of the total capital invested and 56% of all transactions - clear evidence of Germany's central role in the European defense tech ecosystem.

Focus on the "autonomous systems & combat technologies" sub-sector

With 34% of transactions and 38% of the total investment volume, this sub-sector clearly dominates investor activity. It is also strongly represented among the largest deals and the most highly financed companies. "Electronic warfare" follows as the second largest sub-sector with 27% of the volume, largely driven by individual mega deals. Overall, investor interest extends across all subsectors, with a strong concentration on some leading companies.

Consolidation among start-ups in a moderate exit environment

Consolidation has already begun in the DefenseTech VC market. Heavily funded start-ups such as Quantum Systems are actively driving add-on acquisitions and external growth (5 acquisitions since 2021). The general exit environment remains moderate and stable in terms of M&A (approx. 5-6 deals per year), while IPOs remain subdued (only 2 IPOs since 2021)

Financing activity dominated by a few champions

The European DefenseTech VC landscape is dominated by a small group of leading companies that have closed several mega financing rounds (>€150m) - including Helsing, TEKEVER, Quantum Systems, Iceye and Destinus. These top 5 start-ups account for almost 60% of the total capital raised since 2021.