European defencetech hits record $7.4B as investment nearly triples in 2026

European defencetech startups witnessed record $7.4 billion in venture capital investment in 2026, nearly tripling the $2.6 billion raised in 2025, according to a new report from Dealroom and Resilience Media. Mega-rounds accounted for more than 85 percent of the funding this year, with seven deals exceeding $1 billion. Defencetech now accounts for 11.1 percent of European VC investment and is the fastest-growing major segment.

NATO Alliance countries raised $27.1 billion in VC funding in 2026, 1.9 times more than in all of 2025. Specialist defence funds participated in 34 percent of European defence rounds in 2025, up from 17 percent in 2020. Germany leads European defencetech funding, with startups raising $3.5 billion in 2026 and $5.9 billion since 2020.

Munich is Europe's leading defencetech hub, hosting 39 percent of defence VC funding despite only 4.1 percent of VC-backed defence startups. US investors accounted for 47 percent of European defencetech funding in 2025-2026. European defencetech funding is growing faster than the broader NATO and allied market, reaching nearly three times its 2025 total.

The growth is driven by sectors such as quantum, photonics, space, and drones, but Europe remains behind global leaders in areas like AI chips, launch vehicles, and communications satellites.