Business is good for PhysicsX founder and CEO Jacomo Corbo right now.
The UK-based startup, which has created an AI software platform to quickly design parts for manufacturing projects in industries like defence and aerospace, announced the UK’s largest defence tech raise to date last month, a $135m round featuring Atomico, Temasek and General Catalyst.
Alongside that, recent government commitments to ramp up defence spending, with a specific focus on developing novel technology, are seeing many of PhysicsX’s customers — which include Rio Tinto, Applied Materials and Siemens — look to increase production.
It’s part of a Europe-wide scramble to develop homegrown technological and military sovereignty amid rising geopolitical tensions and a sense that the US is becoming a less reliable ally.
But for Corbo, who founded PhysicsX in 2019, it’s been a long wait — and Europeans still aren’t moving fast enough.
While investors are beginning to invest the “right” amount of capital in startups in the sector, Europe’s manufacturers are still dragging their heels on embracing novel tech in the region, he tells Sifted.
“We find organisations across the board that are leaning into technology and buying more quickly in the US,” Corbo says, adding that there’s a “risk aversion to pioneer new technologies” in Europe.
Riding the defence tech wave
Funding for defence and dual use startups in 2025 has already hit €1.2bn, according to Sifted data, and will easily top 2024’s €1.7bn if the remaining five months of the year continue in a similar vein. Both numbers are way beyond the €409m picked up during 2023, according to comparable data from Dealroom.
London-based PhysicsX is riding that wave. As recently as December, the word “defence” didn’t feature on the company’s website. Today, aerospace and defence is the first industry listed as a use case — and is the company’s largest segment in terms of revenue, which currently sits at below $50m in total.
The startup uses AI models to simulate how materials and engineering designs will work in different environments. The big idea is that manufacturers can use PhysicsX’s software to quickly iterate on designs, resulting in less physical testing and significant cost cutting.
While Corbo’s keen to emphasise that the platform can be used across a number of sectors — including semiconductors, materials, automotive and energy — defence is undoubtedly on a march, he says. Aerospace customers are increasingly leaning on PhysicsX to help build parts for projects in that area, Corbo adds.
“Defence is something that Europe is thinking more about,” he tells Sifted, adding that many of the aerospace primes’ market caps have increased in the past 18 months. “A lot of that movement has happened because of the defence side [of their businesses].”
While the majority of the parts PhysicsX is helping design in the aerospace and defence sectors could have civilian use, the “lion’s share” of the work PhysicsX does in that area is for defence projects, Corbo says.
European market challenges
Despite the sector tracking up and to the right, there are still “structural inefficiencies” in the European defence market.
“Europe should be thinking about time to market and scale — you can’t afford as a continent to be duplicating investments,” Corbo says.
“The UK has the entrepreneurs to build category-defining companies in defence. But as a buyer the UK should be thinking about strategic alignment with other members of Europe and NATO in ways that aren’t just thinking about national sovereignty and national champions.”
The UK is currently negotiating the terms of its defence companies’ participation in a €150bn EU defence fund, which will see member states loaned money to buy military equipment from bloc-based sellers and those in “third countries” like Britain. While the UK’s participation in this scheme is now widely considered likely, there was some doubt previously.
Despite being a UK-based company, around 40% of PhysicsX’s revenues are currently from Europe. Too little of the company’s revenue is tied to buyers from its home market, Corbo says: “That’s not a great thing. It reflects the state of advanced manufacturing in the UK economy.”
But there are signs that countries in Europe are increasingly looking to procure from startups.
In the UK, a key recommendation in a recent national defence review is to cut down procurement timelines to three months for novel technologies. The country also said it would invest £400m in defence tech a year in March.
Britain has also seen an influx of defence techs from across the globe — including the likes of US-based Anduril, Germany’s Helsing and Stark and Portuguese-UK company Tekever — which have all announced plans to open factories and invest hundreds of millions of pounds in the country in the past few months.
PhysicsX is hoping to grow in lockstep with the broader defence industry, and Corbo says both headcount and capital deployment in the business will grow significantly over the next two years. The startup’s current headcount of 168 will nearly double by the end of 2026.
Like many in the sector, Corbo has his eyes on a very big prize. Success for PhysicsX will be down to managing to operate at “sufficient scale” and building a customer base across multiple manufacturing sectors. While it is going to be “capital intensive” it’s difficult to put a time frame on when the startup will go back out to raise, Corbo says.
“We don’t think of ourselves as an engineering company or a technology company for engineers, we’re setting out to build a hyperscaler for engineering.”
Read the orginal article: https://sifted.eu/articles/physicsx-european-defence-tech/
