US investors have stepped up funding in European defence technology start-ups, accounting for the largest chunk of private capital flowing to the burgeoning sector this year amid a rise in global conflicts. The US provided more than 65 per cent of venture capital defence tech investment in Europe so far this year, according to Dealroom data, up from 18 per cent in 2023. The increase marks a sharp reversal from the previous year, when more than half of VC funding for defence tech in Europe came from domestic investors. US venture capital firms have provided $458mn to European defence start-ups in the year to date, more than three times higher than the sum invested any other year, according to Dealroom. Overall, VC investments into Europe have grown nearly fivefold since 2018 and are set to hit $1bn this year.  The largest US-led deal included a €450mn fundraising for Munich-based Helsing this summer, which was led by General Catalyst and included Accel and Lightspeed Venture Partners. The increase, said Lorenzo Chiavarini, who leads research into VCs and start-ups at Dealroom, was a sign that the European start-up sector was maturing, with some companies raising larger rounds where US investors are better placed to contribute more. Venture investors, in particular in Europe, had long been wary of backing defence tech companies over ethical concerns but that has begun to change since Russia’s full-scale invasion of Ukraine in February 2022. Although concerns among some investors over the sector’s environmental, social and governance properties are still limiting investment, entrepreneurs and venture capitalists said there was evidence that more European capital was beginning to flow.

Full report : American venture capital funds have provided lion’s share of investment to European military tech start-ups.