Defense Tech Investment Hits Record High as Arms Giants Ramp Up Startup Funding
Hitting EU Renewables Targets Could Slash Gas Demand a Quarter by 2030 CityAM.com is the online presence of City A.M., London's first free daily business newspaper. Both platforms cover financial and business news as well as sport and… Investment in defence tech start-ups has reached a record high this year as the world’s biggest arms companies step up spending on new military technology.
New figures from Dealroom show defence contractors including BAE Systems, Lockheed Martin and Airbus have participated in $4.1bn (£3bn) of venture capital funding rounds so far this year, the highest figure on record.
Meanwhile, separate research from White & Case found 42 defence mergers and acquisitions were completed globally in the first half of 2026, up 56 per cent from the same period last year.
Daniel Turgel, co-head of White & Case’s Global Technology Industry Group, said the sector was seeing strong demand for companies developing AI, cyber security and autonomous systems.
“With AI, autonomous systems, space-based sensing and cybersecurity redefining how conflicts are fought and won, the race to acquire and invest in defence technology is intensifying,” he said.
“The world’s largest defence companies are seeking to strengthen their technology portfolios through acquisitions and large funding rounds.” Turgel said higher defence budgets and record levels of private capital meant investment and dealmaking were likely to remain strong beyond 2026.
The figures come after several large investments by defence manufacturers in recent weeks.
Lockheed Martin last week pledged at least $100m for UK and European defence technology start-ups and expanded its venture investment fund from $400m to $1bn.
BAE Systems has committed €50m to two European venture funds focused on defence, while Airbus has become the anchor investor in a new €500m fund backing dual-use technologies.
German drone maker Quantum Systems raised $1.2bn earlier this month at a valuation of about $8bn, while UK maritime defence business Kraken Technologysecured $175mat a $1bn valuation with backing from Rheinmetall.
Last week ministers awarded £708m to BAE Systems and its Team Tempest partners to continue developing the Future Combat Air System.
The programme includes work on AI, robotics, digital engineering and advanced manufacturing, and supports a supply chain of around 600 companies and academic institutions across the UK.
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