Investment in defense tech start-ups has surged to a record high this year, driven by major arms companies increasing spending on military technology. Defense contractors like BAE Systems, Lockheed Martin, and Airbus have participated in $4.1 billion of venture capital funding this year, marking the highest on record. Additionally, research from White & Case shows a 56% rise in defense mergers and acquisitions, totaling 42 deals globally in the first half of 2026.
According to Daniel Turgel of White & Case, there is a strong demand for companies focused on AI, cybersecurity, and autonomous systems, with a notable shift in investment priorities. He stated, “The race to acquire and invest in defense technology is intensifying.” Higher defense budgets and increased private capital indicate that this trend is likely to continue.
In recent weeks, Lockheed Martin announced a commitment of at least $100 million to European defense tech startups and expanded its venture fund to $1 billion. BAE Systems allocated €50 million to European defense-focused funds, while Airbus led a €500 million fund supporting dual-use technologies.
In the UK, significant investment was awarded to BAE Systems for the Future Combat Air System, involving AI, robotics, and advanced manufacturing. The Technology and Growth Alliance, which includes major defense firms, aims to foster the creation of 20 defense tech spinouts annually.
As the sector evolves, investors are increasingly looking beyond traditional military hardware, recognizing the importance of software, cybersecurity, and autonomous systems. Axel Belorde from TMX VettaFi emphasized that data security is essential in modern warfare, and many defense technologies also serve civilian purposes, broadening investment opportunities.
