FCF DefenseTech VC Report 2026: DefenseTech sector grows strongly

Munich — The Euro­pean defense tech sector is rapidly deve­lo­ping into one of the most dyna­mic segments for venture capi­tal invest­ments. Driven by geopo­li­ti­cal tensi­ons and increased secu­rity aware­ness, the invest­ment volume has increased more than eight­fold since 2021, from €344 million to €2.8 billion (2025). At the same time, the first leading compa­nies — parti­cu­larly from Germany — are estab­li­shing themselves. 

In 2025, the volume of venture capi­tal inves­ted in Euro­pean defense tech start-ups and scale-ups reached around 2.8 billion euros. In compa­ri­son: in 2021, the volume was still at 344 million euros. At the same time, the number of tran­sac­tions rose from 52 to 154 deals (source: FCF Defen­seTech Venture Capi­tal Report 2026). 

“We are seeing a clear struc­tu­ral shift in inves­tor beha­vior. Defense and dual-use topics are now an inte­gral part of many venture capi­tal stra­te­gies,” says Florian Theyer­mann, Mana­ging Direc­tor Venture&Growth I DeepT­ech at FCF. Germany is the leader in Europe with around €2.2 billion in invest­ments (2021–2025); at the same time, a first wave of conso­li­da­tion is begin­ning and IPOs of VC-finan­­ced defense tech compa­nies are also expec­ted in the future. 

Start-ups drive inno­va­tion in the defense sector

Market dyna­mics are incre­asingly being shaped by start-ups and scale-ups, which react faster and more flexi­bly to tech­no­lo­gi­cal requi­re­ments than estab­lished defense compa­nies. Topics such as tech­no­lo­gi­cal sove­reig­nty, mili­tary resi­li­ence and digi­tal secu­rity have been incre­asingly in focus since the start of the Ukraine-Russia war. 

At the same time, a large propor­tion of invest­ments are concen­tra­ted on a small number of leading compa­nies. Start-ups such as Helsing, TEKEVER, Quan­tum Systems, Iceye and Desti­nus account for around 60% of the venture capi­tal inves­ted since 2021. 

“The market clearly follows a ‘the (early) winner-takes-it-all’ logic: capi­tal flows speci­fi­cally into compa­nies with proven scala­bi­lity,” says Arno Fuchs (photo), CEO & foun­der of FCF.

First wave of conso­li­da­tion begins

The leading Defen­seTech compa­nies are incre­asingly acting as conso­li­da­tors them­sel­ves. In the past three years, around 15 acqui­si­ti­ons have been made by these emer­ging cham­pi­ons — inclu­ding both start-ups and a few estab­lished compa­nies. The M&A acti­vity of estab­lished play­ers remains mode­rate in comparison. 

There are also signs of move­ment on the capi­tal market: While IPOs have so far mainly been carried out by estab­lished compa­nies such as Renk, Hensoldt or TKMS, IPOs by VC-finan­­ced Defen­seTech compa­nies can also be expec­ted in the medium term.

Germany at the top in Europe

Germany plays a leading role in the Euro­pean defense tech ecosys­tem. With around 2.2 billion euros in venture capi­tal finan­cing between 2021 and 2025, Germany leads Europe in terms of invest­ment volume. Compa­nies such as Helsing and Quan­tum Systems are making a signi­fi­cant contri­bu­tion to estab­li­shing the loca­tion as an inno­va­tion hub for DefenseTech. 

View the FCF Defen­seTech Venture Capi­tal Report 2026 –> here.

About FCF

FCF Fox Corpo­rate Finance (FCF) is “The Finan­cing Specia­list” for advi­sing, struc­tu­ring and placing debt and equity finan­cing in German-spea­king count­ries. — FCF is active in the two busi­ness divi­si­ons FCF Mittel­stand and FCF Venture & Growth: 

- FCF Mittel­stand advi­ses clients from the upper mid-market, in parti­cu­lar family busi­nesses and their share­hol­ders, on the deve­lo­p­ment and imple­men­ta­tion of finan­cing proces­ses in the context of (re-)financing, invest­ment and acqui­si­tion situa­tions as well as chan­ges in the share­hol­der structure.
— FCF Venture & Growth advi­ses clients in German-spea­king and Euro­pean count­ries, in parti­cu­lar compa­nies from the deep & clean tech and health­care & life scien­ces sectors, on the deve­lo­p­ment and imple­men­ta­tion of capi­tal increa­ses, share place­ments, venture debt, promo­tio­nal and asset-based financing.

FCF main­ta­ins close rela­ti­onships with all rele­vant lenders, finan­ciers and insti­tu­tio­nal inves­tors in Germany, Europe and world­wide. Special exper­tise lies in the coope­ra­tion with family offices and high-net-worth inves­tors. — FCF was foun­ded in 2005 by Arno Fuchs and has one of the largest and most crea­tive teams with over 30 employees. Since its foun­da­tion, FCF has comple­ted more than 250 tran­sac­tions with a volume of over EUR 15 billion. — www.fcf.de