Rapid advancements in military technology are ushering in a new era in Germany. Gundbert Scherf, co-founder of Helsing—Germany’s most valuable defense startup—emphasizes that Russia’s invasion of Ukraine changed everything. Scherf managed to increase his company’s valuation to over $12 billion during the latest funding round. Helsing specializes in producing combat drones and battlefield artificial intelligence systems.
With Europe’s defense technology spending surpassing that of the U.S., Germany is preparing for a revolutionary shift in its defense industry, both at the government level and through startups. The federal government views artificial intelligence and startup technologies as key elements of its defense strategy and is cutting bureaucracy to expedite the integration of new technologies into the Bundeswehr.
For decades, Germany maintained one of Europe’s most cautious defense policies. However, growing uncertainties about U.S. security guarantees and Russia’s military actions in Ukraine have prompted Germany to plan a threefold increase in its defense budget by 2029. A significant portion of this funding will be directed toward innovative technologies that will transform the nature of warfare.
German defense startups are working on a variety of cutting-edge projects ranging from tank-like AI robots and unmanned mini-submarines to reconnaissance insects. For example, Swarm Biotactics equips live insects with miniature cameras, enabling remote surveillance of enemy positions.
A new draft law aims to reduce bureaucratic hurdles for startups to participate in government procurement and allows advance payments, encouraging small innovative firms to compete alongside traditional defense giants.
Defense innovation is increasingly recognized as a critical driver of economic growth. Despite recent economic challenges, expanding military research is seen as a promising way to boost economic activity.
Investment in European defense technology has surged in recent years. German defense startups alone have attracted $1.4 billion from investors in the past five years, the highest amount in Europe.
Germany boasts a highly skilled engineering workforce that forms the backbone of innovative defense projects. The production capacity of its small and medium-sized enterprises (the Mittelstand) provides additional support to accelerate technical development.
Overall, Germany aims to strengthen its leadership in European defense technology through strategic initiatives. Artificial intelligence, drones, and even bio-reconnaissance insects are expected to play a vital role in the future of warfare.
