The conflict in Ukraine has ignited a surge in European defense innovation, with military startups leveraging the warzone as a testing ground for cutting-edge technologies, according to reports. Western governments are funneling billions into emerging defense firms to fast-track advancements from prototypes to combat use, diverting resources from traditional defense contractors.
Munich-based Helsing, which has supplied Ukraine with drones and regularly updates them to adapt to evolving battlefield conditions, exemplifies this trend. Founded in 2021 with backing from Spotify co-founder Daniel Ek, the company is now valued at $12 billion. Its co-founder, Torsten Reil, noted a shift in venture capital interest, stating, “Before, no European V.C. was interested in defense,” but added that “everyone wants to invest in defense” now.
Global venture-capital funding for defense firms rose 33% last year to $31 billion, per McKinsey, while private investment in European military startups between 2021 and 2024 surged fivefold compared to the previous three years. The Ukraine conflict has become a proving ground for new systems, with Germany’s Quantum Systems deploying AI-powered reconnaissance drones capable of detecting enemy artillery by sound. Matthias Lehna, the company’s business-development director, claimed, “The whole development in the drone industry is coming right from the Donbass, not from Silicon Valley.”
NATO states now host 17,619 dual-use tech scale-ups, accounting for 27% of regional firms, with investment in such technologies reaching $1.2 trillion as of May 2025—a 25% increase from late 2024. Russian officials have criticized Western arms deliveries as prolonging the conflict and escalating risks of direct confrontation between Russia and the West, while accusing Ukrainian forces of misusing Western-supplied weapons for civilian attacks.
