German drone startup Stark is negotiating a new funding round of at least €300mn that could value the company at around €2.5bn, according to sources familiar with the talks. Backed by US tech billionaire Peter Thiel, the Berlin-based firm makes so-called "kamikaze" drones designed to destroy targets by crashing into them. This valuation jump represents a significant increase from Stark's previous valuation of over €1bn in an earlier funding round this year.

The fundraising push reflects growing investor appetite for European defense technology companies amid heightened military spending across the continent. Stark's move comes as rival Munich-based Helsing prepares to raise $1.2bn at an $18bn valuation. Both companies are positioning themselves to capitalize on Europe's push to strengthen defense capabilities following Russia's invasion of Ukraine and US pressure for European nations to take greater security responsibility.

Founded in 2024, Stark has already secured a major contract worth roughly €300mn to supply kamikaze drones to Germany's armed forces. The company has also expanded into anti-drone systems through a partnership with Inleap Photonics. However, Stark faces scrutiny from German lawmakers concerned about Thiel's close ties to former President Donald Trump, though the company emphasizes his stake is under 10 per cent with no operational influence.

CEO Uwe Horstmann, who took the helm in October after co-founding venture capital firm Project A, leads Stark's rapid expansion. Previous investors include the Nato Innovation Fund, CIA-linked In-Q-Tel, and Sequoia Capital. The surge in defense tech valuations signals a fundamental shift in European security investment priorities.