Wars in Ukraine and Iran are accelerating investment in defense technology, with startups in the sector raising $12.3 billion from venture capital funds since the start of the year. That is nearly twice the amount raised in the same period last year and about 24% more than in all of 2025, according to PitchBook data published by the Financial Times.
The fighting in Ukraine and the Middle East has highlighted demand for advanced systems that can handle the modern battlefield, including cheap, effective strike drones that challenge traditional anti-tank defenses. The result has been a sharp flow of capital into startups building military and protective technologies. "We are seeing the most important change, perhaps ever, in the way wars are fought," said Daniel Rudnicki Schlamberger, head of J.P. Morgan's security and resilience initiative in Europe. "Valuations have risen sharply after investors realized this is a sector with long-term needs."
Among the biggest beneficiaries is the U.S. company Anduril, which develops drones and robots for military use and raised $5 billion in May at a $61 billion valuation. Other names are also drawing major funding. Britain's Kraken Technology, which develops autonomous vessels for naval mine-clearing and has been chosen by the British Navy for deployment in the Strait of Hormuz, is now raising $100 million at a $1 billion valuation.
German drone maker Helsing completed a $1.2 billion fundraising in May at an $18 billion valuation, while another German startup, Stark, which makes loitering munitions, raised 300 million euros at a 2.5 billion euro valuation. Shonnel Malani, managing partner at Advent International, told the Financial Times that demand for these technologies will remain strong even after the current wars end, saying the need is real, not hype, because more advanced technologies can be used against defenders and must be countered.
