Key points
- Germany triples defence budget, embraces start-ups and innovation
- Helsing leads Europe’s booming defence tech investment wave
- War drives shift in Europe’s defence and economic priorities
ISLAMABAD: For Gundbert Scherf, co-founder of Germany’s Helsing – Europe’s most valuable defence start-up – Russia’s invasion of Ukraine marked a turning point.
For Gundbert Scherf – the co-founder of #Germany’s Helsing, Europe’s most valuable defence start-up – #Russia’s invasion of #Ukraine changed everything.
Scherf had to fight hard to attract investment after starting his company – which produces military strike drones and… pic.twitter.com/kwjsk7IOGX
— Khaleej Times (@khaleejtimes) July 24, 2025
Once struggling to secure investment, his Munich-based company, which develops battlefield AI and strike drones, is now valued at $12 billion. “Europe is spending more on defence tech than the US for the first time in decades,” Scherf noted, likening the moment to a potential European version of the WWII-era Manhattan Project, according to Reuters.
Germany, long cautious due to its WWII legacy and reliant on US protection, is undergoing a dramatic shift. With American support increasingly uncertain, Berlin plans to nearly triple its defence budget to €162 billion by 2029.
Germany wants to lead Europe’s defense by building the continent’s strongest army. With record spending, bold promises, and a new defense strategy, Berlin is aiming high. But will money and ambition be enough? pic.twitter.com/CfDRsWXaLJ
— DW News (@dwnews) June 24, 2025
Chancellor Friedrich Merz’s government is slashing red tape and positioning AI and start-up technology as the core of its modern defence strategy.
Shift in political mindset
Start-ups like Helsing and ARX Robotics are now working alongside traditional giants like Rheinmetall and Hensoldt. New procurement laws aim to support innovation by offering advance payments to start-ups and restricting tenders to EU-based firms.
German firm Quantum Systems unveils MOSAIC UxS, a digital platform to coordinate and manage diverse drones—air, land, sea—via an open interface. Part of the UXS Alliance with ARX Robotics to boost NATO defense. pic.twitter.com/6wV8UFajw8
— WarTranslated (@wartranslated) June 8, 2025
Defence Minister Boris Pistorius recently told founders that “money is no longer an excuse,” marking a shift in political mindset.
Germany’s move is part of a wider European trend. The continent’s top 19 defence spenders are projected to outpace the US in procurement spending this year, even though overall American military expenditure remains higher. Historically fragmented markets and slow procurement have hindered Europe’s growth, but urgency is changing attitudes.
Surplus manufacturing capacity
Venture capital is flowing into defence tech, with European start-ups like Helsing, Quantum Systems, and Portugal’s Tekever now valued over $1 billion. German firms have led the way, drawing on engineering strength and surplus manufacturing capacity from a weakening automotive sector.
Tekever AR-3 Drone – Portugal Becomes 1st NATO Nation to Cross Russian Redline
Photographs have appeared online showing a crashed Portuguese-made Tekever AR3 drone that was involved in the recent Ukrainian strike on Voronezh-DM OTH Early Warning Missile Launch Warning Radar.… pic.twitter.com/VRobyUUV4e
— Vijainder K Thakur (@vkthakur) May 28, 2024
Innovative technologies being developed include autonomous mini-submarines, AI-driven tanks, and even cyborg cockroaches used for surveillance. The Bundeswehr’s Cyber Innovation Hub reports a surge in interest since the war began.
Germany has announced a large package of military aid, which it will deliver to Ukraine by December.
➡️ 2 batteries of the IRIS-M air defense system,
➡️ 2 batteries of the IRIS-T SLS air defense system,
➡️ 10 Gepard,
➡️ about 30 Leopard 1A5 tanks,
➡️ 12 155-mm self-propelled… pic.twitter.com/QDTZx0hmn8— Jürgen Nauditt 🇩🇪🇺🇦 (@jurgen_nauditt) August 15, 2024
Germany is now the second-largest supporter of Ukraine after the US, with start-ups testing their technologies in real-time conflict. Leaders in defence, government, and investment agree: modernising Europe’s defence sector is not only about security but also about revitalising the economy.
As Markus Federle of Tholus Capital put it, “A strong defence industry means a strong economy and innovation on steroids.”
