Global Defense Tech startup funding hits record high in 2025 as the sector becomes venture capital’s new obsession
Across global venture markets, only frontier AI rivals defense tech’s record-setting funding surge. Why is this the only sector keeping pace?
• VC-backed defense tech startups have raised $7.7 billion by October 2025, with more than $48 billion flowing into the broader sector.
• Mega rounds are driving the surge. Companies like Anduril, Helsing, Saronic and Chaos Industries raised between $600 million and $2.5 billion.
• Ten new defense tech unicorns emerged in 2025, pushing the sector’s combined valuation to about $495 billion.
Over the past decade, defense technology was treated like a peripheral category in venture capital. Necessary, but slow. Important, but rarely urgent. That idea doesn't survive contact with the numbers coming out of 2025. Defense tech has moved from the edges of the startup ecosystem to its centre, becoming one of the only sectors keeping pace with the explosive rise of frontier AI.
Across almost every other category, funding has cooled or plateaued. Gaming, edtech, consumer apps, fintech and even parts of climate tech are still far below their peak years. Defense tech is moving in the opposite direction. VC-backed military, national security and law-enforcement companies have raised $7.7 billion by October 2025.
That's already more than double the total for 2024 ($3.2B) and the largest annual figure ever recorded by Crunchbase. Pitchbook’s broader data, which includes all private defence-related investment, goes further. It shows more than $48 billion flowing into the sector this year. That level of capital puts defense tech in a category with only one real peer. AI. No other sector in 2025 has scaled at this pace.
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Why is venture capital flooding into defense tech in 2025?
The scale of this shift becomes obvious when you look at the top rounds in the chart below. Software-driven defense companies are raising the kind of late-stage checks that were previously reserved for AI labs.
We have California-based startup, Anduril which closed a $2.5 billion dollar Series G that lifted its valuation to $30.5 billion. Saronic, the American naval autonomy startup, secured $600 million for its Series C. Helsing raised $694 million to build AI-enabled defense software in Germany and Europe. California-based startup, Chaos Industries raised $275 million and then $510 million in the same year. Portugal's Tekever, US-based Epirus, True Anomaly and Forterra each crossed the $200 million mark.
These companies don't look like the defense contractors that defined the past century. They build and ship with software speed. They deploy AI to detect threats, navigate unmanned vehicles, analyse weapons systems and automate battlefield decisions. They're built for conflicts shaped by low-cost drones, electronic warfare, hypersonic weapons and satellite-denied environments.
This is the same space where the legacy giants have struggled. Lockheed Martin, Raytheon and Boeing still dominate procurement, but their development cycles were built for another era. Six-year timelines no longer match modern conflict where battle conditions change weekly. Ukraine’s battlefield improvisations, China’s rapid investment in autonomous systems, and the rising demand for flexible countermeasures have all exposed the gap. Venture capital is stepping into that gap with urgency.
Techloy
Why are so many new defense tech unicorns emerging at once?
Pitchbook data shows 10 new defense tech unicorns were created in 2025. That's more than the sector produced across the first half of the 2010s. These new entrants include drone manufacturers like Quantum-Systems and Destinus, weapons companies like Castelion, spacecraft makers such as Impulse Space and Apex, and AI-enabled detection platforms like Chaos Industries.
Collectively, the sector’s active unicorns are now valued at roughly $495 billion, which is more than double the size of the category in 2021. Five years ago, defense tech was a niche. This year, it produced some of the largest valuations outside frontier AI. Unicorn creation is often a lagging indicator. In defense tech, it has become a leading one and it signals a structural transformation inside the global military economy.
Loy Okezie
What geopolitical triggers are driving this surge?
The investment story cannot be separated from the geopolitical one. Global defense spending rose 9% last year, passing $2.7 trillion in the sharpest annual increase in more than three decades. The United States accounts for roughly 37% of that. Europe is spending at record levels in the aftermath of the war in Ukraine. China continues to pour resources into unmanned systems, hypersonic weapons and advanced surveillance.
The battlefield evidence is reinforcing the trend. In Ukraine, a single coordinated drone operation known as Spider Web deployed 117 drones and caused an estimated $7 billion in damage to Russian assets. Incidents like this are shifting procurement priorities. Agility now matters as much as mass. Software now matters as much as hardware.
Governments are responding, too. The United States has set a $1 trillion defense budget for 2026, nearly 39% higher than 2021. Spending on missile defense, space systems and autonomous technologies is accelerating. When governments speed up procurement, startup momentum follows.
Is defense tech in a bubble or is this a long-term shift?
Investors disagree on the terminology but not on the direction. They expect overvalued companies, but they also expect a small group of lasting winners. Over the next 12 to 18 months, several startups are likely to secure major national and international contracts. Those deals will shape the next decade of defense technology.
What's striking is who's entering the space. Point72 has launched defense-specific funds. Y Combinator is actively seeking defense startups. A new founder community has taken shape in El Segundo, where entrepreneurs describe themselves as building for national security rather than for general-purpose software markets. The shift is cultural as much as economic.
What does this mean for the future of global defense?
Defense tech has become the second centre of gravity in global venture capital. It is not competing with AI as much as it is converging with it. Companies like Helsing, Chaos and True Anomaly operate more like AI labs than like traditional military vendors. They are rewriting what modern defense systems look like.
The next decade of military innovation will not be led by the companies that defined the last century. It will be shaped by software-first defense startups built for a world where conflict evolves weekly. The volume of capital moving into the sector shows that governments and investors have already aligned around that shift.
The rise of defense tech in 2025 is a structural realignment of one of the world’s largest and least disrupted industries; not a trend. And it's happening at a pace few would have predicted two years ago.
Emmanuel Oyedeji
