Investment in defence tech start-ups has reached a record high this year as the world\u2019s biggest arms companies step up spending on new military technology.<\/p>\n
New figures from Dealroom show defence contractors including BAE Systems, Lockheed Martin and Airbus have participated in $4.1bn (\u00a33bn) of venture capital funding rounds so far this year, the highest figure on record.<\/p>\n
Meanwhile, separate research from White & Case found 42 defence mergers and acquisitions were completed globally in the first half of 2026, up 56 per cent from the same period last year.<\/p>\n
Daniel Turgel, co-head of White & Case\u2019s Global Technology Industry Group, said the sector was seeing strong demand for companies developing AI, cyber security and autonomous systems.<\/p>\n
\u201cWith AI, autonomous systems, space-based sensing and cybersecurity redefining how conflicts are fought and won, the race to acquire and invest in defence technology is intensifying,\u201d he said. \u201cThe world\u2019s largest defence companies are seeking to strengthen their technology portfolios through acquisitions and large funding rounds.\u201d<\/p>\n
Turgel said higher defence budgets and record levels of private capital meant investment and dealmaking were likely to remain strong beyond 2026.<\/p>\n
The figures come after several large investments by defence manufacturers in recent weeks.<\/p>\n
Lockheed Martin last week pledged at least $100m for UK and European defence technology start-ups and expanded its venture investment fund from $400m to $1bn.<\/p>\n
BAE Systems has committed \u20ac50m to two European venture funds focused on defence, while Airbus has become the anchor investor in a new \u20ac500m fund backing dual-use technologies.<\/p>\n
German drone maker Quantum Systems raised $1.2bn earlier this month at a valuation of about $8bn, while UK maritime defence business Kraken Technology secured $175m <\/a>at a $1bn valuation with backing from Rheinmetall.<\/p>\n Britain steps up defence spending<\/strong><\/p>\n Last week ministers awarded \u00a3708m to BAE Systems and its Team Tempest partners to continue developing the Future Combat Air System.<\/p>\n The programme includes work on AI, robotics, digital engineering and advanced manufacturing, and supports a supply chain of around 600 companies and academic institutions across the UK.<\/p>\n The government is also backing new defence businesses. The Technology and Growth Alliance, whose members include BAE Systems, Thales, Leonardo and Helsing, aims to help create 20 defence technology spinouts a year by turning military research into commercial businesses.<\/p>\n Andy Burnham has also indicated defence will remain a priority after appointing former defence secretary John Healey as Chancellor.<\/p>\n The prime minister said on Sunday he was \u201cvery aware\u201d<\/a> of Healey\u2019s calls for higher defence spending and that fully funding the Defence Investment Plan would be one of the new Chancellor\u2019s first tasks.<\/p>\n Axel Belorde, head of business development for EMEA and Asia at TMX VettaFi, said investors were increasingly looking beyond traditional defence manufacturers.<\/p>\n He said software, cyber security and autonomous systems were becoming just as important as military hardware.<\/p>\n \u201cMore and more data is going to win wars,\u201d Belorde said. \u201cIf that data gets compromised, you\u2019re better off with no data than compromised data.\u201d<\/p>\n Belorde added that many defence technologies also have civilian uses, from logistics to predictive maintenance, broadening the investment opportunity.<\/p>\n