European defence tech startups are preparing for fresh fundraising rounds as companies focus on scaling weapons production for the region's armed forces. Recent deals include Frankenburg Technologies developing low-cost AI-based anti-drone systems and German firms Tytan Technologies and Quantum Systems securing financing amid rising demand for affordable defence solutions.

While 2025 saw record investment of nearly $9bn in European defence start-ups, companies still struggle to secure substantial European capital. US investors accounted for over a third of funding last year, with venture capital investment in US defence being 8.5 times larger than in Europe. Many find raising between €50mn to €200mn from European sources "hard or impossible".

Government procurement remains challenging, with spending concentrated on established defence contractors rather than innovative start-ups. As Quantum co-founder Florian Seibel noted, Berlin fails to spend enough on autonomous systems and AI. The European Investment Bank has stepped in with €70mn for Quantum, but start-ups need government contracts to attract larger investments, with a €10mn deal enabling €100mn in follow-on funding.