Russia’s invasion of Ukraine has reshaped generations of start-ups and attracted investors who have introduced a completely new business model in the construction of European military arsenals.
Governments around the world are spending trillions of dollars to prepare for a new type of conflict, dominated by technology, and this wave of funding is profoundly transforming the way modern nations equip their armies, writes The New York Times.
In Europe, where Moscow is using drones to bomb Ukraine and test NATO’s resilience, a new generation of companies is no longer waiting for state-funded projects. Instead, start-ups are attracting private capital to accelerate research and prototyping, hoping that governments will later become customers.
“It’s a revolution in the defense industry,” says Gundbert Scherf, former advisor in the German Ministry of Defense, co-founder of Helsing — a military technology company created in 2021 with initial investments from Daniel Ek, the head of Spotify. The company’s value has already reached 12 billion euros, after supplying armed drones to the Ukrainian army, constantly adapted to changes on the battlefield.
Venture Capital and Military Stakes
The new approach is meant to provide faster and more efficient innovations than the traditional “top-down” model. But there are obvious risks: the main goal of private investors is profit, which can conflict with the strategic priorities of national security.
In 2023, global investments in defense companies increased by 33%, reaching $31 billion, according to McKinsey. In Europe, funding for start-ups in the field has multiplied five times in just three years.
The results range from low-cost drone interceptors and naval ships controlled by artificial intelligence, to “bugs” equipped with micro-cameras capable of penetrating hard-to-reach areas.
Ukraine, Testing Laboratory
The war triggered by Russia has accelerated these trends. In the past, American companies like SpaceX or Palantir paved the way for integrating the “Silicon Valley” mentality into the military industry. Now, Ukraine has become a “battlefield laboratory”, where 80% of military targets are destroyed by drones.
Germany leads the European offensive in this field, with start-ups like Helsing, ARX Robotics and Swarm Biotactics — the developers of the controversial “spy-bugs.”
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