VC funding in European protection know-how is predicted to achieve a document $1 billion in 2024, in response to the report

After growing fivefold since 2018, VC investment in Europe's defense technology is set to have a record year in 2024 as it is on track to reach $1 billion.

Europe is now at the center of an investment surge as governments turn to the defense technology sector to bolster national security in response to escalating geopolitical instability, according to a new dealroom report.

“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 head of Europe at the VC firm General Catalyst.

Zu Fürstenberg added that startups have “a crucial role” to play. “Their agility, speed and deep technical expertise are crucial.”

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According to the report, defense technology startups and scaleups have raised $3 billion in venture capital in the last three years. This means the sector now accounts for 1.8% of total European VC funding – an increase that has more than tripled since 2022.

Germany at the top

Germany, the UK and France dominate investments and have received 87% of total funding. Specifically, the three countries have raised a total of $2.2 billion since 2018.

Over the last six years, investment in Germany alone has exceeded that of the United Kingdom, the Nordic countries, the Netherlands and Switzerland combined.

Munich has attracted the largest share of the capital of any European city, thanks in part to Helsing's $487 million fundraising in 2024. The next major investment hubs are Bristol and Paris.

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

The NATO countries are placing big bets

According to the report, VC investment in Europe's defense technology startups is outpacing investment growth across the NATO group by 25%.

However, increasing capital flows can be observed in all member countries, with the USA taking the lead.

Overall, venture capital investments by NATO countries have quadrupled since 2018. The alliance is now on track to close at $5.9 billion by 2024. This will bring the total investment in defense technology by start-ups in the NATO region to $18 billion since 2018.

There are now 370 venture capitalist-backed startups in NATO countries with a total enterprise value of $161 billion.