The intrinsic nature of venture capital causes this industry to always be in search of the latest high-risk, high-reward opportunities. Nowadays, such a combination is offered by a long-forgotten, currently lucrative and growing market: defense tech startups. Astonishing data supports the increasing interest in this field: financial data company PitchBook reports that between 2021 and 2024 investors poured nearly $155 billion globally into defense tech startups, compared to a much lower figure of $58 billion over the previous four years.

Europe is one of the protagonists of this surge, hitting a record high of $5.2 billion in VC funding for European defense and security in 2024. This soaring trend is fueled by the current geopolitical situation.

VC Sees Opportunity in Crisis: Major ongoing conflicts around the world, such as the Russian-Ukrainian conflict, which began in February 2022 with the Russian invasion of the Donbas region, and the conflict between Israel and Hamas, started on October 7th, 2023, by the invasion of Israeli territory pose serious concerns to many countries around the globe.

Moreover, existing alliances and balance of power have not looked this fragile in years. One example of this is Trump’s return to the White House, which appears to be another distressing element that could spur investment in defense due to the President’s threats to withdraw the US from NATO, unless allies commit to increasing their defense spending.