As the US grows less supportive of Europe and the war in Ukraine drags on, Europe has been waking up to the need to spend more on its defence capabilities.
The EU recently unveiled an €800bn plan to rearm the continent, and German tech leaders are calling for sweeping changes to the local defence industry including boosting talent and streamlining procurement processes.
For young defence startups, the shift in focus could mean a payday in the future. Though it’s unclear to what extent recent initiatives will directly support European defence upstarts, investors hope more contracts and revenue will flow their way.
“We must focus on cultivating new champions rather than solely financing established players,” Uwe Horstmann, general partner at Berlin-based VC Project A, recently told Sifted.
While some defence companies such as German AI defence titan Helsing have raked in the lion’s share of funding — it raised €450m at a €5bn valuation last summer — there’s a host of perhaps lesser-known startups on VCs’ radars right now.
Sifted polled four VCs for their top picks of defence tech startups to watch — with the catch that they couldn’t nominate any companies in their portfolio. Responses were edited for clarity.
Nicola Sinclair, founding partner of Twin Track Ventures
Twin Track Ventures is a London-based fund focused on dual-use and deeptech, which Sinclair is still raising. It invests in pre-seed and seed startups in NATO countries including the US and UK, as well as Australia.
Blackshark.ai — Austria
Blackshark.ai is delivering high-speed, low-compute change detection for any form of data that can be visualised. The startup is known for its focus on making a 3D digital twin of the entire planet. This includes satellite and aerial imagery, but also less obvious forms of data like radio waves that can be transformed into a visual representation. Its approach is really scalable and the range of use cases is huge.
Stanhope AI — UK
A University College London spinout, Stanhope AI is helping autonomous agents use human-like decision making to understand and navigate the physical world. Mirroring how the brain processes information, its approach allows machines [like drones or warehouse robots] to continuously learn and self-correct based on their surroundings. Real-time, adaptive decision making is one of the hardest problems in autonomy and it’s been great to see this team make tangible progress.
ICOMAT — UK
iCOMAT designs and manufactures ultra-lightweight carbon fibre composite structures, increasing part strength while cutting production time and cost. Its technology opens up new design possibilities for vehicles like high-performance aircraft while slashing their operational energy demands. This is less about sustainability, and more of a question of strategic resource management. Europe will remain reliant on high-density liquid fuel imports for the foreseeable future. iCOMAT is part of a wave of companies developing highly differentiated manufacturing capabilities in Europe, helping to reduce our dependence on volatile global supply chains.
Uwe Horstmann, general partner at Project A
Project A is an early-stage generalist VC firm based in Berlin which also invests in defence tech. Its portfolio companies include ARX Robotics and Quantum Systems.
Project Q — Germany
The Q platform — built on mission-type tactics — enables seamless integration across legacy defence architectures by tackling fragmented data systems that hinder real-time decision-making. Its software helps fuse disparate data streams into holistic situational awareness across air, land, sea and cyber domains. The Berlin-based team combines defence expertise with technical backgrounds, and has initial traction from the German Armed Forces.
Ark Robotics — Ukraine
Over 200k unmanned systems are deployed monthly in Ukraine, yet only a tiny fraction of them have any degree of autonomy or run on digital communication backbones: 98% of the systems are deployed and operated by pilots in the trenches using analogue comms. Ark Robotics focuses on providing the underlying network infrastructure to maintain connections with unmanned systems at any point and location in conflict zones. Enabling scale elevates the usefulness of unmanned systems exponentially — enabling complex missions impossible for single units, distributing risk across systems and efficiency through coordinated operations.
Arondite — UK
Arondite is addressing a core problem: as unmanned systems and robots increase in numbers, the complexity to manage and operate them at scale becomes exponential — especially consolidating the data created across multiple manufacturers and different systems. Arondite is building AI tools and software to better connect humans with robotics, unmanned systems and sensors. The team is world-class and has seen the problem first hand in their previous military and tech careers.
Chris O’Connor, partner at the NATO Innovation Fund
The NATO Innovation Fund is a €1bn fund backed by 24 NATO allies to invest in defence, deeptech and dual use technologies in member countries.
Frankenburg Technologies — Estonia
Frankenburg Technologies is flipping the economic cost of defence by developing missile systems that cost a fraction of traditional systems and can be produced in far greater quantities. As cheap mass floods the battlefield, using systems that cost millions against systems that cost thousands is unsustainable. Frankenburg leverages modern manufacturing and design to bring the cost of rocket science down.
Isembard — UK
Isembard is reversing the declining industrial manufacturing base across Western countries by standardising a unique business model for machine shops. Aerospace and defence companies looking to scale rapidly need access to a reliable, cost-effective manufacturing base. Rather than centralise manufacturing in a large, expensive factory, Isembard works with the existing base of small machine shops to trigger a new wave of entrepreneurship; it has one factory so far and plans to open more.
Arctic Research and Development — UK
The company is building high latitude autonomy solutions tailored to the unique Arctic environment targeting logistics, energy and government. The Arctic region is expected to see an explosion of economic activity and geopolitical competition as global warming opens it up, yet very few products can survive the harshness of the region.
Nicholas Nelson, venture partner at Superangel
Superangel is an Estonia-based early-stage VC and company builder.
Alloyed – UK
Alloyed provides technologies for digitally-enabled advanced manufacturing. With a recent £37m Series B round, it’s transforming defence, VR/AR and automotive, while working with global leaders from Boeing and Microsoft to the UK Ministry of Defence. Within defence specifically, it’s advancing the capabilities of metal components and transforming how materials are made, systems are designed and capabilities are delivered.
Akhetonics – Germany
It has a lofty goal of being Europe’s answer to Nvidia. Akhetonics is building the world’s first photonic high-performance processor and the first all-optical chip. By replacing the electron on the chip with the photon, you have physics on your side, and Akhetonics is unlocking untapped potential on performance KPIs that are considered bottlenecks of compute today.
Lendurai – Estonia
The startup specialises in autonomous flight technology by developing its own software and integrating a range of hardware components. In an industry where most entrepreneurs have spent decades in the sector, Lendurai is a relative newcomer, but is outcompeting established autonomous systems companies. It brings together world class computer vision and aerospace experts with track records at Bolt, Starship and Open Cosmos.
Read the orginal article: https://sifted.eu/articles/defence-tech-startups-to-watch/
