EU investors turn to drones, battlefield AI

European tech companies that work with the defence industry, long an investment taboo for many venture capital firms, are drawing record amounts of funding in the wake of Russia’s invasion of Ukraine.

In the past year, governments across the continent have ramped up spending on military defence, pledging billions of euros to modernise and build their militaries.

Private investment in defence-related tech companies has increased in tandem. According to startup data provider Pitchbook, investment in aerospace and defence last year reached an all-time high of almost 780 millio euron.


This marks a major shift. “It’s just not an option to not have the discussion,” said Uwe Horstmann, a general partner of Project A, which invests in defence tech companies.

“Because it’s so clear that the situation has completely changed.” In peacetime Europe, investing in defence could be controversial. In October, Project A, Sanno Capital and billionaire Peter Thiel invested $17.5 million in Quantum-Systems GmbH, a drone company that develops docking stations which allow unmanned aerial vehicles to be charged and deployed without human operators.

In 2022, Quantum-Systems supplied 42 drones through the German armed forces to support the Ukrain. Partly as a result of the war, European defence startups have dodged the broader slump in tech investment.