US private money pitches weapons built by startups into field of battle

Ukraine's battlefields are shifting. Three years into the war, tankers and trenches are being replaced by autonomous weapons, built by startups and battle-tested on the frontlines. And, increasingly, they’re backed by private money.

- Patricia Clarke

According to The Observer's analysis of data from Dealroom and Crunchbase, European defence companies saw a 650% increase in private investment between 2022 and 2024. The analysis also found the majority of private defence funding in Europe comes from the US. American venture capital (VC) and private equity funds have invested nearly three times as much as funds from Germany and Switzerland. Many investors say all funding is welcome. But others argue that the injection of US private capital might give the US outsized influence over the European defence sector.

Since the second world war, cutting-edge defence technologies have mostly been backed by public investment. “That has now pivoted. We're now seeing Al materials [and] biotech coming out of the private sector,” says John Ridge, the chief adoption officer at the Nato Innovation Fund.

Rather than investing heavily in R&D, governments can “leverage the massive investments that are being done in the private sector and play them back into the national security sector”, says Ridge.