For a defence tech startup, securing a government or ministry of defence (MoD) contract to supply their products or services is the holy grail. But it’s not easy: founders say the process of actually winning those contracts is mired in bureaucracy, slow-moving procedures and less-innovative-minded decision makers.
“Everything’s expensive, everything’s outdated, [there’s] no willingness to change,” Florian Seibel, founder of German unmanned aerial drones startup Quantum Systems, told Sifted last year — adding that the process hasn’t improved enough in recent years.
“The budgets are very much focused on these huge systems; startups only need a fraction of that to accelerate. We’re not that expensive,” Jeanette Hvam, CEO of Danish camouflage startup DECPT, said on a panel last year. “What we need, what is super critical, is user feedback.”
Still, several governments have been taking a chance on European defence tech startups, in many cases through more experimental or pilot programmes as Europe’s defence tech set builds up its capabilities. Some startups, like German AI defence startup Helsing or Quantum Systems, have managed to secure coveted programmes of record — pre-approved and budgeted buckets of money for a certain defence capability.
Sifted took a look at a number of European startups working with governments from the US to Latvia, and reached out to all of the startups to confirm their collaborations. If you know of a startup that’s missing from this list, please reach out.
Quantum Systems
Munich-based Quantum Systems, founded in 2015, builds AI-powered unmanned aerial surveillance drones, which can spy enemy whereabouts and deliver information, but don’t actually strike targets. Founder and CEO Seibel, a German armed forces veteran, says that while he can’t speak about ongoing tenders, the startup has secured a number of programmes of record in the last two years, with the governments of the US, Colombia, Ukraine, Australia, Germany and Spain.
Last year the company signed a three-year contract worth €18.4m with the Romanian MoD to supply it with its aerial data capture Vector drones. It was under contract with the German armed forces to deliver drones last year, and the startup also had “some ongoing tenders” in Germany, according to Seibel, who spoke with Sifted in July.
Quantum System’s US subsidiary also signed two contracts with the Australian government totalling $90m AUD (€54m) last summer.
The startup has raised $169m in funding to date, according to PitchBook, from investors including HV Capital, PayPal and Palantir cofounder Peter Thiel and Project A.
Helsing
German AI defence startup Helsing, which raised €450m last summer at a €4.95bn valuation, secured a programme of record early on in its journey: it was selected as part of a consortium to provide AI software for the Future Combat Air System (FCAS), a joint project to modernise air systems with Germany, France and Spain. Helsing was also selected by the German MoD to equip fighter jets with its AI in partnership with defence company Saab, and tells Sifted it’s also working with governments in Estonia, Ukraine and the UK.
Last summer, Helsing signed a joint statement with the Estonian government to expand its operations in Estonia and the Baltics and invest €70m into the region, including a new operational facility.
Helsing is also working with the German government to provide drones equipped with its software to Ukraine.
And, though the startup has historically focused on building AI software for defence, it recently added hardware with the announcement of its own strike drones in December (different to the ones being sent to Ukraine via the German government).
Comand AI
French startup Comand AI, which was founded two years ago and is building an AI software platform that military officers can use to more efficiently plan and strategise operations, told Sifted it has already executed one contract with the French army and is working with France and Germany on two pilot contracts.
The startup recently raised €8.5m in seed funding from VCs including Eurazeo and Expeditions Fund.
Origin Robotics
Riga-based startup Origin Robotics, which builds reusable autonomous drones, tells Sifted it’s working with the Latvian MoD, having signed a €5m contract with the armed forces, as well as the Drone Capability Coalition, co-led by the UK and Latvia, which aims to send 30,000 drones to Ukraine via £45m worth of contracts — with funding coming from the UK, Denmark, the Netherlands, Latvia and Sweden.
The startup raised €4m last year from investors including Baltics-based VC Change Ventures.
ARX Robotics
Founded in Germany in 2022, ARX builds unmanned ground vehicles that can supply and rescue troops on the front lines as well as deceive the enemy with things like imitation gunshot noises in training.
Cofounder Marc Wietfeld told Sifted that ARX collaborates with Germany, the UK, Austria, Switzerland, Hungary, Ukraine and Lithuania for test series, projects, contracts and participation in programmes of record, but declined to provide specifics as some projects are confidential. Wietfeld told Sifted in October that the company had more than 10 contracts and that its robots had been deployed in Ukraine for a year.
ARX also works with the European Defence Agency (EDA) on a European level and with several NATO vehicles. Last year the startup raised €9m from investors including Project A, the NATO Innovation Fund (NIF) and Discovery Ventures.
Blackshark.ai
The Austrian startup, which provides a real-time 3D digital twin of the earth using satellite and aerial imagery processed by AI, told Sifted it’s working with multiple EU and “Western-aligned” MoDs and intelligence agencies — but said it couldn’t disclose more due to confidentiality.
US nonprofit defence investor In-Q-Tel, which helps connect startups with the US government, invested in its most recent funding round — a $15m extension to a Series A totalling $35m last year.
Hadean
The London-based spatial computing company makes simulation tools and says it’s worked with the British Army, helping validate a cloud platform approach for the Army Collective Training System (ACTS), a collection of training tools for soldiers. Last February, Hadean was awarded a contract to develop a synthetic human terrain for British Army simulations through the Defence and Security Accelerator (DASA). The company is also working with Deloitte to supply its technology to NATO’s modelling and simulation group’s capability development initiatives.
The startup recently signed an enterprise agreement with the UK’s MoD worth up to £20m, which it said will enable other “entities to work with us as a credible supplier of proven technology.”
Hadean’s work in the US has been more experimental, participating in the Joint Interagency Field Experimentation (JIFX) event, organised by the Naval Postgraduate School, where Hadean trialled its AI spatial intelligence platform (the event enables private companies, students and academia to demonstrate new technologies).
The startup has raised $52m to date, according to PitchBook, from VCs including In-Q-Tel, Molten Ventures and Entrepreneur First.
Adarga
The London-based startup is building AI analysis tools for defence and security, and recently announced an enterprise agreement with the UK MoD worth up to £12m to use its AI information intelligence services. Agarda has contracts with the US and UK governments, and tells Sifted it also “recently did some work with a German government department,” but declined to provide further specifics citing confidentiality.
Adarga most recently raised $20m in 2023 and is backed by investors including Allectus Capital.
Nu Quantum
The British startup spun out of the University of Cambridge in 2018 and is building technology that allows quantum computers to network with each other and scale faster. Last year, Nu Quantum won a UK government contract worth £2.3m, along with Cisco, to build a quantum data centre based on its networking tech.
The startup has raised €13.5m to date and is in the process of raising its Series A round; it’s backed by VCs including Seraphim Space, Amadeus Capital Partners and IQ Capital.
Living Optics
Founded in 2019, the startup spun off from the University of Oxford’s physics department. Living Optics creates computational hyperspectral cameras, which can identify minerals, vegetation and other materials. It was among several companies awarded a contract by the UK’s DASA to develop better electro-optics and infrared sensor capabilities — the whole project worth £2.3m.
The startup most recently raised £20m from investors including Octopus Ventures, Oxford Sciences Enterprises and Braavos.
If you know of a startup that’s missing from this list, please reach out: anne@sifted.eu.
Read the orginal article: https://sifted.eu/articles/european-defence-startups-government-contracts/
