It is hard enough building a successful start-up at the best of times. But these are decidedly not the best of times for Viktoriia Yaremchuk, co-founder of the Lviv-based start-up Farsight Vision. Electricity blackouts, missile strikes and sudden conscription of her employees add extreme jeopardy to Yaremchuk’s mission. “Working underground is not that cool. We are not in a garage in Silicon Valley, but a cellar in Ukraine,” she tells me. Yaremchuk’s company, which provides situational awareness software for drones, is one of scores of Ukrainian start-ups that are helping their country defy Russia’s invasion. They are also adding a new dimension to warfare as they rapidly innovate in response to feedback from the front line and raise money from venture capital firms and rich donors to boost the country’s overall defence spending. This privatisation of war is being closely followed by Nato members, helping to trigger a surge in defence tech investment across North America and Europe. Since 2019, VC investment in defence start-ups in Nato countries has increased fourfold, rising to $3.9bn so far this year, according to a Dealroom report released last week. The US accounts for 83 per cent of VC defence tech investment, with EU countries and the UK recording 15 per cent since 2018. Investment in the sector has risen from 0.4 per cent of VC funding in Europe in 2022 to 1.8 per cent this year. The investment case for defence tech was made by several company founders and VCs at the Resilience Conference in London last week. The urgent need to defend democracy has drawn many mission-driven entrepreneurs into the field. Many such start-ups are also creating dual-use technologies, enabling them to tap into civilian markets.

Full opinion : There is a lot of money flowing into the fast-changing defense technology sector but investing and innovating in weapons carries risks.