The global military expenditure has reached $2.4 trillion, leading to an increased interest in defense tech startups and investments. One such example is the German-based AI startup Helsing, which has attracted significant capital due to its military potential. Investors are particularly interested in tech solutions with dual-use potential, meaning they can be used for both civilian and military applications. This trend reflects a shift towards “resilience tech,” which aims to make democratic societies less vulnerable to attacks and aid in faster recovery.
Helsing’s mission resonated with mainstream investors like Spotify founder Daniel Ek, indicating a change in society’s mindset and venture capital itself. Previously, funds were prevented from investing in weapons by their vice clauses, but they are now willing to support international startups in the resilience tech space, with the support of major limited partners like the European Investment Fund.
Several venture capital firms outside of the U.S. are taking a bet on resilience tech. The NATO Innovation Fund (NIF) is a $1 billion fund dedicated to advancing defense, security, and resilience. NIF has made investments in various verticals such as AI, space tech, manufacturing, transportation, and robotics. While NIF’s direct investments are limited to startups from its LPs (including Iceland), it is also a fund of funds, backing VC firms like Alpine Space Ventures and Join Capital.
OTB Ventures, founded in 2017, focuses on deep tech with support from NIF and the European Investment Fund. Its investments include space tech, enterprise automation and AI, cybersecurity, and fintech infrastructure, all falling under the resilience tech category. OTB recognizes that many startups utilize dual-use technology, with the defense sector increasingly applying civilian technologies.
MD One Ventures, based in the U.K., is dedicated to supporting applied deep tech innovation for the U.K., Europe, and Allies. It invests in both software- and hardware-based companies with national security, enterprise, and defense backgrounds. Its portfolio includes startups like Labrys Technologies and Materials Nexus, which utilize AI in military and materials discovery applications, respectively.
The Israel Resilience Fund was launched in response to the Hamas attacks, aiming to raise $50 million to invest in startups impacted by the war or developing solutions relevant to Israel’s immediate needs. It is part of the investment platform OurCrowd and has seen strong support, with 35 teams in its portfolio and over $3.1 billion raised by Israeli startups since the war began.
D3 is an early-stage fund that focuses on investing in founders leveraging technology to help Ukraine defend itself and contribute to the future of national security. Its portfolio covers verticals like drones, sensors, and unmanned aerial vehicles (UAVs), often incorporating AI. D3 also played a role in organizing a defense tech hackathon in London, indicating a growing pipeline of startups for these VCs to invest in.
Overall, the rise of defense tech as an investment trend reflects a broader shift towards resilience tech. Investors are recognizing the potential for tech solutions to benefit society beyond defense applications. These venture capital firms outside of the U.S. are actively supporting startups in the resilience tech space, contributing to global innovation and security efforts.