Last week, news surfaced that Anduril Industries, a leading defense tech startup, is considering opening a factory in the U.K. The company, now valued at $14 billion, recently secured a nearly $40 million contract from the U.K. government to supply drones to Ukraine, as the Russia-Ukraine conflict continues into its third year alongside ongoing tensions in the Middle East.

Despite these global security concerns, European investors have yet to match the level of funding their U.S. counterparts are pouring into the defense tech sector.

In 2024, defense tech investment in Europe reached a new high, with nearly $626 million going into VC-backed startups in the sector. However, this amount is still less than one-fifth of the $3.2 billion invested globally in defense tech startups, and it pales in comparison to the $2.5 billion invested in U.S.-based startups alone.

US Defense Tech Dominates
While Europe represents about one-sixth of the global venture market, the bulk of its defense tech funding went into one major deal: Helsing, a German AI software company focused on defense applications. In July, Helsing raised $489 million in funding, bringing its valuation to $5.4 billion. The company designs software that enhances the capabilities of weapons in drones and jet fighters, and aids battlefield decision-making.

This Helsing round was the largest ever raised by a European defense tech startup, and it stands in stark contrast to the much larger funding rounds in the U.S. defense tech industry. In 2024, U.S. defense tech startups secured $2.5 billion across 67 deals, including 14 rounds exceeding $140 million.

U.S.-based companies like Anduril Industries, which raised $1.5 billion in a Series F round, and Saronic, which secured $175 million, highlight the significant financial resources driving the U.S. defense tech sector.

Room for Growth in Europe?
While the U.S. continues its trend of securing massive investments in defense tech, Europe is lagging behind. So far in 2025, U.S. defense tech startups have already raised $1.5 billion in just 15 deals, while European startups have raised only about $1 million in a few deals.

Despite the current gap, there is potential for growth in Europe. Last year, the NATO Innovation Fund made its first investments, completing several deals and backing venture capital firms that focus on early-stage deep tech in defense, security, and resilience markets.

Additionally, with changing global politics and rising security concerns, Europe may soon view defense tech as a promising investment sector, similar to how the U.S. has embraced it in recent years.

However, Europe still faces a long road ahead. U.S.-based startups closed nearly three times as many funding rounds as their European counterparts in 2024—67 rounds in the U.S. versus just 23 in Europe.

If Europe aims to catch up to the U.S. in defense tech investment, both deal flow and funding dollars will need to increase significantly.