Europe’s defence‑tech fundraising surged to €2.5bn in 2025, more than double the €1.2bn raised a year earlier. Start‑ups targeting pre‑Series B rounds have already secured €556 million this year, rivaling the full‑year total of 2024. The boom reflects prolonged conflict in Ukraine, fresh Middle‑East wars and a broader shift toward rapid‑pace warfare. Investors see the sector as a hedge against geopolitical risk.

Experts warn that most government spend is trapped in procurement. Roughly 80% of European defence budgets buy foreign equipment, while only 20% funds domestic R&D, far below the U.S. model. Collaborative purchasing sits at 18%, missing the 35% target set by the European Defence Agency, limiting scale and speed of innovation. Without a shift, Europe risks lagging behind rivals in critical technology domains.

To keep firms beyond Series B on the continent, policymakers urge public‑sector capital. The British Business Bank backed Hadean’s £11 m (€13 m) raise, and the European Investment Bank joined a €150 m round for Quantum Systems. Aligning procurement with R&D and channeling pension‑fund money into these vehicles could finally create a self‑sufficient European defence ecosystem. Such financing would also diversify revenue streams for pension trustees seeking long‑term returns.