Venture capital investments in defence tech start-ups across NATO countries and Europe have surged dramatically, reaching $3.9 billion in 2024, a fourfold increase since 2019. The United States accounted for a staggering 83% of total investment, while the European Union and the UK together represented 15%. Notably, Germany, the UK, and France captured 87% of this funding, raising $2.2 billion since 2018, with Munich emerging as the primary investment hub, followed closely by Bristol and Paris [2f77c48d].
In total, there are 370 VC-backed defence tech start-ups in NATO countries, boasting a combined enterprise value of $161 billion. This growth reflects a broader trend in the tech landscape, where the war in Ukraine has underscored the critical role of space in modern warfare. The commercial space market is projected to reach an impressive $1.8 trillion by 2035, highlighting the intersection of defence and technology [2f77c48d].
The NATO Innovation Fund has also established a €1 billion fund to support start-ups in this sector, further emphasizing the strategic importance of innovation in defence technology. Klaus Hommels and Prof. Dame Fiona Murray have stressed the necessity for transatlantic cooperation in advanced technologies, indicating a shift towards collaborative efforts in bolstering defence capabilities [2f77c48d].
In a broader context, the Nordic countries and the Baltic region are emerging as serious contenders for Europe’s digital technology hub, with a notable increase in unicorns—privately owned tech start-ups valued over $1 billion. Since 2013, the number of unicorns globally has surged from 39 to over 1,200, with the United States hosting more than half of these, primarily through Silicon Valley [c07f0c79].
Within the European Union, unicorns are predominantly concentrated in Germany (30%), France (15%), and Sweden (14%). However, the Nordic nations have created 73 unicorns from 2013 to 2023, accounting for 17% of Europe’s total unicorns despite representing only 4% of its population. Sweden leads the charge with 39 unicorns, followed by Denmark (16), Norway (11), and Finland (7). Estonia also contributes with 10 unicorns, including notable companies like Skype and Wise [c07f0c79].
Recent analysis highlights that European venture capital funds have achieved impressive net returns greater than 20% annually over a 10-year horizon. In the past decade, VC funds invested €143.6 billion into over 26,100 startups across Europe, which collectively employ more than 1 million people, showcasing an 18% job creation rate in 2022 [fb6d658b].
As Sweden’s high-tech entrepreneurs continue to thrive, the Nordic nations’ potential to become Europe’s answer to Silicon Valley becomes increasingly plausible. Events like Slush and the Looking for Growth conference, held in London on December 11, 2024, are seen as crucial for promoting tech-led growth [3edf9293].
Despite these advancements, challenges persist, including fragmented regulations and issues with capital flow. The EU’s Capital Markets Union aims to tackle these obstacles, but experts like McKinsey warn that Europe risks losing its industrial leadership if it does not enhance its competitiveness in the tech sector [c07f0c79].
Ursula von der Leyen has highlighted national barriers that hinder startups, emphasizing the need for a more cohesive approach to support innovation across Europe. Meanwhile, major US tech companies continue to dominate the global market, while Europe’s largest firms remain older entities, underscoring the urgency for a new wave of innovation [3edf9293]. OpenAI CEO Sam Altman has even threatened to withdraw ChatGPT from Europe, signaling the growing tension between regulatory frameworks and technological advancement [3edf9293].
