Record capital flows into defence technology
Defence technology is rapidly moving from a specialist corner of venture capital to a mainstream investment theme. In 2025, venture deals in the sector reached a record $49.1 billion, more than double the prior year, according to PitchBook. The shift reflects heightened geopolitical pressure, faster adoption of AI and autonomous systems, and a growing willingness among investors to frame defence as aligned with democratic resilience.
Funding and exits accelerate
In the U.S. alone, defence tech startups drew $14.2 billion in equity funding in 2025, up from $5 billion a year earlier, per CB Insights. Exits also jumped, with venture-backed outcomes totaling $54.4 billion versus $18.2 billion in 2024. The number of VC firms active in the space increased by 41%, suggesting the investor base is broadening beyond specialist funds.
Josh Manchester, a general partner at Champion Hill Ventures, said investors increasingly view the sector through a strategic lens: “We are in a global competition with China for economic, military and technological dominance.”
From autonomous platforms to personal protection
High-profile rounds continue to concentrate around autonomous hardware and software. Anduril Industries, valued at $14 billion after a $1.5 billion Series F, is building autonomous drones, surveillance towers and an AI-driven manufacturing platform. Peers including Shield AI and Saronic are expanding autonomy into air and maritime domains.
But investors are also widening their focus to the “full stack” of field capability—especially personal protection. Startups are applying faster iteration cycles, materials science and AI-assisted testing to body armour and tactical equipment, where NIJ certification remains a key benchmark for professional use.
Dual-use demand reshapes the market
A major driver is dual-use technology, which can serve military and civilian buyers. That expands addressable markets and reduces reliance on slow procurement cycles. Protective equipment once limited to government issuance is increasingly sold to law enforcement, private security, emergency responders and civilians—bringing consumer-style distribution and product velocity into a traditionally rigid category.
Analysts expect 2026 to reward companies that can field systems quickly, but the message from investors is clear: autonomy matters, and so does the equipment protecting the humans who operate it.
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