Resilience is having a moment — for all the wrong reasons. War, cyberattacks, fragile supply chains and geopolitical shocks have made it painfully clear: we can no longer afford brittle systems. As a result, defence tech has become one of the hottest topics among founders and investors.
This week’s NATO Summit in The Hague reaffirmed just how high the stakes are. In a historic move, allied governments committed to raising defence spending to 5% of GDP by 2035 — more than double the current 2% guideline. It’s a clear signal: the geopolitical reality has shifted, and so must the way we build defence capabilities.
At General Catalyst, we’ve been investing in this space for over two decades, backing transformational players like Anduril, Helsing, Saronic and Raphe — founders building real-world capabilities at the intersection of software, systems and national security.
For anyone looking to build in this space today — particularly founders — here are three hard-earned lessons from our journey.
1/ Focus — and build the right team
There’s a persistent myth in defence tech that ‘dual-use’ is always the smarter strategy. The thinking goes: if you build for both commercial and defence markets, you’ll have more flexibility and more growth paths. But that’s not always true.
Take Anduril and Helsing, two of the most impactful defence-first companies in the world. If we had stuck to a strict dual-use thesis, we would have missed them both. What matters more than your go-to-market label is whether your product solves a critical need — and whether your team has the DNA to operate in defence environments.
If your strengths are in commercial markets, start there. If you want to build for national security, start here. The defence market is big enough to support many winners. In fact, last year, Europe’s defence spending alone amounted to €326bn.
But make no mistake: defence tech is hard.
It demands focus and a specific kind of muscle. You’ll need to understand the interplay of governments, military and procurement. That means spending real time with defence ministries and policymakers. It means understanding arcane procurement cycles, compliance hurdles and strategic programme offices. It means hiring people who speak that language, or being humble enough to learn it yourself. There is no shortcut around that.
When founding a defence tech company, it should start with who’s in the room. Ask yourself: Does your founding team include someone with a defence background — or the willingness and commitment to learn how it works?
2/ You can’t be afraid of hardware if you want to change the world
Another trap: thinking you can disrupt defence with software alone. It’s tempting. Software scales. It’s capital-light. But software alone won’t deter enemies and defend our liberal democracies — and hardware alone won’t do it either.
The battlefield reality in Ukraine has made that abundantly clear. It’s no longer just about the number of tanks or aircraft. The edge now comes from automation, real-time data flow and digital integration. Software-powered hardware that performs in the field. These systems have to be fast, precise, cost-effective — and you need to be able to build them at scale.
Some defence tech companies build hardware from day one. Others bring in the right partners to get there. Both paths can work — as long as you understand that in defence, capability is delivered as a system.
Take Helsing. It started as a pure software company. Today, it also builds drones and mini-submarines. It even acquired Grob Aircraft to develop the next generation of capabilities for aerial warfare.
The truth is: most startups can’t do this on their own. They often lack the manufacturing expertise, supply chain depth and infrastructure to build and deliver at scale. And that’s okay — because no one should have to. What matters is finding the right model to bridge software speed with industrial strength.
3/ Governments: spend smart, not just more
But here’s the caution: this new generation of defence startups still faces real obstacles. Even with NATO’s funding surge, procurement often still follows the old playbook. Startups may win small pilots, only to fall into the ‘Valley of Death’ as procurement defaults to long timelines and traditional tenders.
The first wave of recent defence spending in Europe largely flowed into technologies of the 2000s and 2010s. Systems that are familiar, but not necessarily fit for today’s threats. Future investments must focus on strategic capabilities: autonomous systems, AI, sovereign space access and networked platforms that can create asymmetric technological advantages.
Policymakers need to go beyond just admiring innovation and posing with startups for glossy press shots. They need to help them scale — by connecting them with industrial players to build joint capabilities that meet real operational needs.
A promising step is NATO’s freshly announced Rapid Adoption Action Plan, which aims to get cutting-edge tech into the hands of armed forces within 24 months. That’s the right ambition — but national procurement systems must now follow through and make it real.
Because without structural reform, writing bigger cheques isn’t enough. Modernisation requires smarter spending, faster processes and credible scaling pathways for the technologies that will define tomorrow’s battlefield. We need fast-track pathways that let critical tech move at startup speed, not bureaucratic pace.
Done right, this isn’t just about deterrence. It’s about building a modern, resilient defence ecosystem that can evolve as fast as the threats it faces. One that attracts the next generation of talent, deploys capability at speed and restores trust in the institutions tasked with protecting us. Because ultimately, responsible innovation in defence safeguards our democracies and shared values — and it calls for leaders with the mindset and integrity to make it happen.
Read the orginal article: https://sifted.eu/articles/investing-defence-tech-general-catalyst/
