Venture capital investment of $49.1 billion was injected into defense technology startups in 2025, a massive investment surge that brings a fresh spotlight to a question less glamorous than autonomy demo shows or model benchmark tests: Which firms have the capacity to scale?
Venture capital investment amounts increased significantly in the datasets of both defense-oriented and dual-use companies. Total VC investment value, according to PitchBook, reached $49.1 billion, a sharp increase from the $27.2 billion of the previous year, and the value of equity investment, as calculated by CB Insights, grew to $17.9 billion, a sharp increase from the $7.3 billion of the previous year.
This split is important, as the most investable technologies, in the areas of advanced computing, autonomy, sensing, and software, tend to be in companies with broad civilian markets but still have a path to national security programs.
What remained at the gravitational center for this year were autonomous systems and decision support via AI, but investors’ focus swung from prototypes to throughput. Jason Saltzman, speaking for CB Insights, summed up this shift nicely: What Ukraine has shown is that drones and autonomous systems have proven in combat, and this has completely altered VCs’ perspectives about defense investments. As a result, defense investments have been normalized within mainstream VCs’ portfolios, which has expanded the group of investors.
But what evolved alongside the size of the checks was the type of problem that investors are trying to solve. “The next competitive battleground,” said PitchBook’s Ali Javaheri, “is manufacturing scale,” with investment not only in new manufacturing facilities but in toolchains such as robotics, software-driven manufacturing, and supply chains that can ensure a product can be scaled from a small batch to a repeatable output. PitchBook also separately tracked manufacturing-focused defense investment, which climbed to $4.7 billion in 39 deals in 2025, up from $2.6 billion in 24 deals in 2024.
This focus has its own set of regional nuances. According to CB Insights, equity funding in the U.S. saw a near-tripling of investments to $14.2 billion, while Europe increased to $2.48 billion, despite Europe having a greater increase in deal numbers. Europe’s defense industry was seen, according to Dealroom, as the fastest-growing VC industry in 2025, with “mega-rounds in ‘AI x defence’” pouring funding into fewer scale players.
The biggest funding rounds of the year continued the “neoprime” paradigm of venture-capitalized companies challenging established companies in a particular field. Anduril took in $2.5 billion at a valuation of $30.5 billion, while the uncrewed surface vessels ambitions of Saronic were scaled up considerably with a $600 million raise. On the other side of the Atlantic, Helsing’s €600 million raise at a valuation of €12 billion kept battlefield AI at the forefront of the defense tech agenda in Europe.
The number of exits was also up, which is another sign that defense tech is being viewed more and more as a category and not a niche. PitchBook put the number of venture exits in 2025 at $54.4 billion, which was up from $18.2 billion in the previous year, largely due to acquisitions. The most dramatic exit mentioned in the database was the $20 billion purchase of Groq by Nvidia, which reminded everyone that the supply chain for AI compute is inextricably linked to the feasibility of autonomous and data-intense defense systems.
The immediate test of the near-term investor is execution. Saltzman wrote, Growth is a function of ‘translating venture capital into large-scale manufacturing capacity and navigating supply chain constraints,’ while Javaheri captured the economics of the next step: “Execution, not invention, will drive returns.” This means that the defense technology bubble has shifted from “proving a capability to proving a system and that’s a different kind of engineering problem.”
