European defense companies attract capital and the trend is not about to stop. According to CNBC, which cites a joint report from the NATO Innovation Fund and the Conficious, the Risk Capital Investments in the new European Defense companies reached $ 5.2 billion in 2024. Investors are closely interested in these companies that will benefit from a part of the rearme ambitions of European countries, whose military budgets are increasing in particular the NATO to those who dedicate 5% of GDP Defense expenses.
Laredana Muharremi, Morningstar analyst, tells CNBC that he has noticed “a radical change” since 2022 “, with a strong acceleration in the first half of 2025”.
According to the Morningstar analyst, the new defense companies most affected by these investments are those that are in the field of artificial intelligence applied to drones, cybernetic or space.
Less and less mergers and acquisitions
Laredana Muharremi also adds that the nature of transactions has evolved, moving from additional acquisitions focused on mergers and acquisitions for risk capital investments. One of these companies, Scout Ventures, whose headquarters is in Texas, focuses, for example, on new companies in the starting phase.
Investors have confirmed to the US media that the defense sector was increasingly in the center of the concerns of European investors. Questioned by CNBC, Archie Muirhead, partner of the British company IQ Capital, says that duals or defense -based companies represented up to a third of the portfolio, but that for two or three years, IQ Capital has begun to “invest mainly or even exclusively, in the defense sector in Europe.”
Support innovation
This new trend is not exempt from risks, the trajectory of many new companies is still uncertain. The return on investment is not immediate and the impact of this influx of capital should not bear fruit “before two or three years”, according to Matt Kuppers, co -founder of the Founder of Venture Capital Defense Invest, created in 2024 and which specializes exclusively in the defense sector and a new phenomenon.
According to him, new companies should bet on their “agility” against large defense groups, which could give them an advantage in the response to tenders. “I think that new companies specialized in defense technologies can contribute significantly to large -scale innovation in this area,” he anticipates. However, for Archie Muirhead, European companies will compete with their US rivals to win government contracts. This risk is identified and denounced regularly by the head of Dassault Aviation, who advocates European preference in military purchases.
Source: BFM TV
