Dealroom and NATO Innovation Fund: European defense, security, and resilience startup funding rose 55% YoY to a record $8.7B in 2025, with AI accounting for 44%
Ahead of the big Munich Security Conference later this week, the analysts at Dealroom teamed up with the NATO Innovation Fund …
Context & Ripple Effects
This extends a clear acceleration from the $5.2B recorded for EU defense-tech investment in 2024 and a 2025 pipeline in which defense was already helping support European venture activity. It also follows a funding mix in which US investors supplied most European defense-startup VC in 2024, making the new record relevant to both capital availability and ownership of the sector.
First-order effects
- European defense, security, and resilience startups enter 2026 with a substantially larger recent funding base; AI-linked companies captured 44% of the reported 2025 total.
- Dealroom and the NATO Innovation Fund gain a stronger data point for positioning defense and resilience as major European venture categories rather than a niche allocation.
Second-order effects
- The concentration of funding in AI raises the bar for non-AI defense and resilience companies competing for investor attention, while drawing more capital toward AI-enabled security applications.
- The reported growth reinforces defense as a contributor to European VC activity alongside AI and fintech, likely sharpening investor competition for companies that span those categories.
Third-order effects
- If sustained, the pattern points to a more state-aligned European AI investment market, where security and resilience needs increasingly shape which applications attract private capital.
- The prior reliance on US capital means a larger market does not by itself establish European capital independence; the eventual investor mix will determine whether growth changes control as well as funding volume.
The trend: European venture capital is increasingly channeling AI investment through defense, security, and resilience priorities.