European defense startups to raise record $10.5 billion in 2026, Dealroom forecasts

PARIS — European defense startups are forecast to raise a record $10.5 billion of funding this year, roughly four times the $2.6 billion raised a year earlier and led by investments in firms developing drone technology, according to Dealroom, which tracks data on venture capital funding.

Defense startup funding in Europe already reached $7.4 billion as of Sept. 20, led by so-called “mega rounds” raised by Germany’s Helsing and Quantum systems, Dealroom and Resilience Media said in their annual State of Defence Tech report published Monday. That compares to $1.5 billion of funding for European startups in the defense space as of September a year earlier, based on the 2025 report.

Europe is grabbing a growing share of the defense-tech investment pie, with the European Union accounting for 21% of defense startup funding raised by September, from 15% last year. The share of the United States fell to 75%, the lowest ever, according to the Dealroom data.

“This is Europe catching up rather than the U.S. slowing,” Dealroom said. “EU 27 funding more than doubled in a year.”

Mega rounds made up more than 85% of the venture capital invested in European defense startups this year, including Helsing’s $1.8 billion Series E round in July according to Dealroom. German startups have set every fundraising record in European defense-tech venture capital funding since 2023, the report said.

Across NATO countries, defense startups raised $27.1 billion in venture capital so far in 2026, already more than $14.5 billion raised in all of 2025, and the amount is forecast to total $38.5 billion by the end of December.

Europe is channeling the largest share of venture capital into drones and autonomous systems, which accounted for 74% of the funding in the EU and 77% in the United Kingdom, compared to 57% in the United States. European startups in that segment that raised money included Helsing, Quantum Systems and Stark in Germany, Harmattan AI in France and Cambridge Aerospace in the U.K.

In Europe, the segment of unmanned aerial vehicles accounted for $4.7 billion raised as of September, according to the Dealroom data, followed by Earth observation and satellite imagery with $1.8 billion, anti-drone solutions and launch vehicles, each with $1.2 billion, and maritime robotics, with $796 million raised.

European startups in ground robotics, or unmanned ground vehicles, are trailing for now, with $77.6 million of venture capital funding so far this year, according to the Dealroom data.

Germany is the top European country for defense venture capital funding this year, with $3.5 billion raised, ahead of Finland with $1.2 billion, the U.K. with $932 million and France with $376 million. Munich is the European defense tech capital, attracting $3 billion in VC funding as of Sept. 20, ahead of Helsinki, London, Berlin, the English city of Cambridge, and Paris.

“Munich is the powerhouse of the European defense tech ecosystem,” Dealroom said. “Helsing and Quantum Systems drive most of it, together worth $25.7 billion. Behind them a younger cohort is forming across ground robotics, counter-drone and hypersonics.”

Funding for defense startups is diversifying as the sector grows, and total private investment in NATO defense startups, which also includes private equity, debt and grants, is forecast to reach $42.7 billion from $16.9 billion a year earlier, according to Dealroom.

Defense is the fastest-growing sector in Europe in terms of startup funding, ahead of space and robotics, according to Dealroom. Defense accounted for 15% of overall venture capital funding in the EU, from 6.2% reported a year earlier, while across NATO, defense attracted 4.9% of venture-capital funding as of September.