Europe’s Defense Innovators Are Building for the Long Term

European defense technology is entering a durable investment cycle because warfare, procurement and industrial policy are shifting toward faster innovation, autonomous systems and sovereign capability.

• Alta Ares grew from five employees to around 150 in two years after being founded in 2024, while Russian attack drones evolved from roughly 300 km/h propeller designs to jet-powered variants approaching 600 km/h and operating at up to 8,000 metres.
• The Black Sea experience is pushing navies away from traditional carrier strike groups toward hybrid fleets combining crewed and uncrewed vessels; Kraken’s uncrewed surface vessels are already deployed in the Black Sea and the Persian Gulf.
• Start-ups are scaling through incumbents: Kraken has a joint venture with Rheinmetall and a partnership with Anduril, while Helsing’s first major industrial partnership was with Saab.
• Ukrainian users provide an unusually fast testing and iteration environment, while examples from the Middle East and Gulf show that drones can remain unused when buyers lack training, software support or automation.
• Demand should persist beyond the Ukraine conflict through multi-year naval procurement, depleted inventories, industrial rebuilding and rising sovereign-defense spending; Beyond Vision operates in more than 25 countries and is building a large facility in Egypt.

Takeaway: Investors should favor defense companies able to scale manufacturing, provide complete operational capability and participate in likely consolidation, while recognizing that more than 230 European defense start-ups have created a market with both credible businesses and speculative valuations.