Report: Enterprise capital investments in European protection expertise will attain a document $1 billion in 2024

After increasing fivefold since 2018, VC investment in European defense technology is expected to reach a record year in 2024 and is on track to reach $1 billion.

Europe is currently at the centre of an investment boom as governments turn to the defence technology sector to bolster national security in response to escalating geopolitical instability, according to a new report from Dealroom.

“As we face war on European soil for the first time in decades, the urgency to strengthen our security and build a modern defense software stack has never been greater,” said Jeannette zu Fürstenberg, managing director and European head of VC firm General Catalyst.

Zu Fürstenberg added that start-ups play a “crucial role” in this. “Their agility, speed and in-depth technical know-how are indispensable.”

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Over the past three years, defense technology startups and scaleups have raised $3 billion in venture capital, according to the report. The sector now accounts for 1.8% of total European VC funding – and has more than tripled since 2022.

Germany at the top

Germany, the UK and France dominate the investment, attracting 87% of the total financing. Specifically, the three countries have raised a combined $2.2 billion since 2018.

Over the last six years, investments in Germany alone exceeded those in the UK, the Nordic countries, the Netherlands and Switzerland combined.

Of all European cities, Munich has attracted the most investors, thanks in part to Helsing's $487 million capital raising in 2024. Bristol and Paris are the next major investment centers.

In addition to Bristol, five other British locations made it into the top ten, including London (4th), Reading (5th), Oxford (6th), Leeds (8th) and Cambridge (9th).

The NATO countries invest large sums

According to the report, venture capital investments in European defense technology start-ups are outpacing investment growth across the NATO group by 25 percent.

However, there is an increasing flow of capital in all member countries, with the USA taking the leading position.

Overall, venture capital investments by NATO countries have quadrupled since 2018. The Alliance is now on track to close 2024 with $5.9 billion, bringing total investments in defense technology made by NATO startups since 2018 to $18 billion.

There are now 370 VC-backed startups in NATO countries with a total enterprise value of 161 billion US dollars.