A Big Bet on DSR in Europe - in this area +500% since 2020
Phoro: Resilience Factory. Source: Helsing
Europe's Defense, Security, and Resilience industry saw a +30% increase in funding in 2024, while VC investments in the rest of the tech sector were down strongly overall.
What's driving this growth?
In the wake of the largest war on European soil since WWII and constant hybrid assaults on the continent's infrastructure, institutions, and economies, and as geopolitical and military alignments are shifting, defense, security, and resilience tech are thriving.
Amid escalating global instability and hybrid/conventional threats, European Defence, Security, and Resilience (DSR) startups are on the rise. They're dealing with everything from cyber threats (think ransomware) → protecting physical infrastructure like energy grids and AI-assisted decision-making within Control and Command.
But numbers tell much more than words: DSR startups saw a whopping 5x growth over six years and accounted for 10% of total VC funding across Europe in 2024 - unthinkable just a few years ago.
Within DSR, startups that work on solving problems in Defence, like Awareness, Understanding, and Decision, make the largest proportion of growth. 2024 saw record VC funding in this area, reaching $1 billion—500% up since 2020.
Here's one surprise: Munich is at the forefront of this surge. The southeastern German city now hosts 38 Defence-, Security- and Resilience-focused startups. In 2024, VC investments in Munich-based startups grew to $996 million. That's one-third (!) of total funding in Europe's DSR sectors.
More than 50% of the sum is contributed to two companies with billion-dollar valuations: Helsing, a company focused on awareness and decision-making AI for Defence, received €450m in funding last year. The Exploration Company from Planegg near Munich, which focuses on operations and mobility in space, secured €150m.
However, the second-largest investment in Europe went to Quantinuum, which protects critical infrastructure leveraging Quantum computing.
The Cambridge-based firm raised a $300m round in January 2024.
Besides the Munich funding surge in 2024, Oxford, Paris, and Munich have been the three main hubs in Europe for VC funding in Defence, Security & Resilience since 2019.
What has occurred since then?
➤ Over 850 unique European investors in 2024, tripling over the last 5 years.
➤ Almost 70% of investments in European DSR in 2024 were attributed to European investors → Yet, US investors are picking up steam as well, accounting for a quarter of all investments in Europe's DSR startups.
The DSR startups that received the most funding are active in AI, computing, and, surprisingly, Biotech and Human Enhancement. Collectively, they've received $3 billion in investment just in 2024.
Globally, European companies are leading in securing VC funding for quantum and grid technology. They are also strong in Earth Observation and In-space Operations but lag much behind in crucial areas such as AI chips, launch vehicles, and humanoids—all highly decisive technologies for future defense and warfare.
Investments in Europe remain clustered around hubs and themes – such as Munich and Oxford, and quantum and grid tech.
We must get closer to the battlefield in Europe for defense AI: Ukraine and Baltic countries are here strongly making up ground or, in the case of battlefield-tested AI capabilities in drones and Control and Command, are even globally leading. Ukraine defense companies are testing and tweaking on the battlefield in days, not months - something that the defense AI startups in the US and China can't do yet.
