Defense tech startups saw increased venture funding last year, reaching $3 billion across 102 deals. This represents an 11% increase from 2023, when $2.7 billion was raised in 100 announced rounds. Anduril, a prominent defense tech startup based in Costa Mesa, California, secured a funding round in August that valued the company at $14 billion.
This round contributed to the overall growth in defense tech funding. Investors have become more knowledgeable about defense in recent years, leading to more efficient allocation of funds. A representative of a Huntington Beach, California-based startup creating defense systems said, “Investors are better at assessing product-market fit and identifying which problems are worth solving.”
Other significant funding rounds in 2024 included Europe-based Helsing, which develops artificial intelligence software for defense applications.
Helsing was valued at $5.4 billion. An autonomous surface vessels maker also secured funding at a $1 billion valuation, becoming the newest unicorn in the sector. Ateya, president and managing director at a venture arm of aerospace and defense giant RTX, attributed the rise in defense tech spending to various factors.
Funding surge for European defense startups
These include an increasingly fraught geopolitical landscape and heightened demand from defense customers and Congress to support new firms. Technologies receiving strong interest from defense tech investors include artificial intelligence, autonomous systems, advanced propulsion technologies, and space tech.
The growth of defense tech is expected to continue, partly because many of these technologies have dual applications in defense and commercial industries. Defense spending will also likely increase under the new White House administration, further boosting investor interest. Several big-name firms like Andreessen Horowitz have shown significant interest in defense tech through their newly established “American Dynamism” practice.
A general partner at a major venture firm said, “We are in a global competition with China for economic, military, and technological dominance. The preservation of our way of life depends on winning this competition. Fear of failure is the primary driver.”
Earlier this month, a Syracuse, New York-based radar startup secured significant investment, and a defense manufacturer developing long-range hypersonic strike weapons in El Segundo, California, raised a substantial round.
Given current geopolitical tensions, it is unlikely that defense tech investment will slow down.