Torsten Reil, co-CEO of Germany-based military software firm Helsing, warned of a defense tech bubble in Europe, estimating 80% of such companies “won’t make it” while speaking at Bloomberg’s tech conference Tuesday. The continent has seen a massive influx of spending in the sector since Russia’s invasion of Ukraine in 2022, creating a business ecosystem ripe for startups.
European defense tech companies are expected to receive $2.3 billion in venture capital funds this year, up from $525 million in 2021, prior to the war, according to Dealroom. Helsing has benefited from the environment, raising €1.3 billion in that time ($1.5 billion), including €600 million in June.
Others have sung a different tune on the likelihood of the sector’s success, pointing to decades of underinvestment and a global game of catch-up. Procurement timelines have shortened and nations continue to increase their budgets. The landscape will test whether the industry can outlast Europe’s more pressing geopolitical concerns, potentially making the region a hotbed for new defense technologies as it lags behind the US in AI.