DefenseTech
DefenseTech covers the venture-backed and emerging-vendor side of military and dual-use technology - autonomous platforms, AI-enabled targeting and command software, electronic warfare, hypersonics and counter-drone systems - distinct from the traditional defence primes (Lockheed Martin, RTX, Northrop, BAE, Airbus Defence). The category was once treated as off-limits by mainstream venture; that ended in 2022 with Ukraine, accelerated through 2023-25 as European NATO members committed to 2-3.5% of GDP defence spending, and by 2025 had attracted some of the largest private rounds in venture history (Anduril, Helsing, Shield AI).
The sector spans autonomous and uncrewed platforms, AI-enabled command and targeting software, electronic warfare and counter-drone, space and ISR sensors, hypersonics, and munitions and effectors.
Revenue comes from DoD and allied-nation production and engineering contracts, foreign military sales, software subscriptions sold to defence agencies, IRAD (independent R&D) and SBIR/STTR grants, and per-unit hardware deliveries on awarded programs.
DefenseTech is part of Industrial technology.
$176B
Global market size
183
Public companies
Key VC investors
Key strategic buyers
How DefenseTech companies monetize?
Defence tech companies monetize through program-of-record contracts, software subscriptions to defence agencies and per-unit hardware deliveries.
Program-of-record contracts
Multi-year DoD or allied-nation production contracts awarded after a successful program-of-record competition. The anchor revenue line for any scaled defence player.
IRAD-funded R&D
Company-funded R&D investment that becomes recoverable as overhead on subsequent government contracts. Standard mechanic in DoD contracting and tracked closely.
Software subscriptions
Per-seat or per-platform software licences sold to defence agencies. Palantir AIP and Anduril Lattice are the reference names; growing faster than hardware lines.
Per-unit hardware deliveries
Unit-priced deliveries of drones, autonomous vessels and munitions under standing contracts. Scales linearly with production volume.
Foreign military sales
Government-to-government sales of US defence equipment to allied nations under DSCA-managed contracts. Margin-positive and politically important.
SBIR/STTR & OTAs
Small-dollar early-stage contracts funding R&D and prototypes (SBIR Phase I-III, OTA-funded prototypes). The entry point for most new defence-tech entrants.
DefenseTech valuations in May 2026
Public DefenseTech comps trade at 3.7x EV/Revenue. Median revenue multiple across DefenseTech M&A deals was 2.9x in the last 12 months. Median revenue multiple across DefenseTech VC rounds was 26x in the last 12 months.
3.7x
Median EV/Revenue as of May 2026 for public DefenseTech companies
72x
Palantir is the highest valued public DefenseTech company based on EV/Revenue (excluding outliers)
2.9x
Median EV/Revenue across DefenseTech M&A deals in the last 12 months
26x
Median EV/Revenue across DefenseTech VC rounds in the last 12 months
DefenseTech market segments
Defence tech spans autonomous and uncrewed platforms, AI command and targeting software, and munitions and effectors.
Autonomous & uncrewed platforms
Uncrewed aerial, maritime and ground vehicles built for defence applications. Anduril (private, valued at $30B in 2025), Shield AI (raised $300M+ Series F in 2025 at $5.3B), Saronic (raised $600M Series C in 2025 at $4B), Saildrone, and HavocAI lead.
AI command & targeting software
Software platforms for ISR fusion, mission planning, target identification and command-and-control. Palantir (NYSE: PLTR), Anduril Lattice, Helsing and Vannevar Labs sit here.
Electronic warfare & counter-drone
RF jamming, spoofing and counter-UAS systems for protecting ground forces, ships and bases from drones. Epirus, DZYNE Technologies, Dedrone (Axon, acquired 2024) and CACI lead.
Space & ISR
Defence and intelligence satellite constellations, payloads and ground-segment software. HawkEye 360 (raised $100M Series E in 2024), BlackSky (NYSE: BKSY), Planet Labs (NYSE: PL) and Capella Space sit here.
Hypersonics & propulsion
Hypersonic missile and propulsion programs and the venture-backed entrants supporting them. Hermeus (raised $100M Series B in 2024), Ursa Major, Stratolaunch and Castelion (raised $100M+ in 2024) are the reference names.
Munitions & effectors
Loitering munitions, precision strike, energetics and missile components. Mach Industries (raised $79M Series A in 2024 led by Khosla), AeroVironment (NASDAQ: AVAV), Skydio and the broader Ukraine-driven loitering-munition cohort sit here.
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For founders who want to improve their FP&A functions, build an investor-ready financial model, and prepare for the next VC round.
Capital raising
For bootstrapped and already-VC-backed entrepreneurs who are looking to raise late stage venture or growth capital.
M&A
For category-leading technology companies who are exploring exit alternatives with either financial or strategic acquirers.
Key DefenseTech KPIs to track
Contract backlog, revenue growth, gross margin and program win rate are the metrics investors track in defence tech.
| KPI | Definition |
|---|---|
| Contract backlog | Signed but undelivered DoD and allied-nation contract value. The cleanest forward indicator for revenue in defence. |
| Revenue growth | Year-on-year revenue change. Standard top-line metric; the listed defence-tech cohort (Palantir, Kratos, AeroVironment) reports this every quarter. |
| Government revenue % | Share of revenue from government customers. The mark of a pure defence player versus a dual-use vendor; investors value the two profiles differently. |
| Gross margin | Separates software-led players (Palantir 80%+) from hardware-led players (Anduril, Kratos, AeroVironment in 25-35% range). The most-watched valuation metric in the sector. |
| ARR | Annual recurring revenue from software contracts. Palantir, Anduril Lattice and Vannevar publish this; the metric that earns SaaS-like multiples. |
| Program win rate | Share of competitive program competitions won by the vendor. Tracked closely in DoD contracting as the leading indicator of franchise health. |
| Cash runway | Months of operating cash at current burn. Critical for venture-backed defence challengers given multi-year contract cycles. |
| Headcount with clearances | Employees with active security clearances. The bottleneck on growth for any defence vendor; clearance backlog has been a persistent issue post-COVID. |
Main DefenseTech players globally
The most active defence tech companies and category leaders globally.
| Company | HQ | Overview |
|---|---|---|
Anduril Industries anduril.com |  Costa Mesa | Vertically integrated defence prime challenger. Raised $1.5B Series F in 2024 at $14B valuation; the company was last valued at $30B in 2025 after a follow-on round. Products include Lattice (C2 software), Sentry towers, Anvil counter-UAS, Roadrunner and the Fury fighter drone. |
Palantir palantir.com | Denver | Listed on NYSE as PLTR. Government data analytics and AI platform. AIP (Artificial Intelligence Platform) became one of the fastest-growing enterprise products of 2024-25. Joint Maven Smart System contract with the US Army worth up to $480M signed in 2024. |
Shield AI shield.ai | San Diego | Autonomous flight software (Hivemind) and the V-BAT VTOL UAS. Raised over $300M Series F in early 2025 at a $5.3B valuation. Strong adoption with US Marine Corps and Ukrainian forces. |
Saronic saronic.com | Austin | Autonomous surface vessels (ASVs) for the US Navy. Raised $600M Series C in 2025 at a $4B valuation led by General Catalyst, Andreessen Horowitz and Elad Gil. Founded 2022; one of the fastest-scaling defence-tech companies on record. |
Helsing helsing.ai |  Munich | European defence AI company; raised €450M Series C in 2024 at $5.4B valuation led by General Catalyst. Anchor partner on Saab Gripen and Eurofighter ISR programs and the AI-augmented HX-2 strike drone. |
HawkEye 360 he360.com | Herndon | Commercial RF geospatial intelligence constellation. Raised $100M Series E in 2024. Strong commercial pull from US, EU and Pacific government customers and primary RF intelligence vendor for Ukraine. |
Saildrone saildrone.com | Alameda | Long-endurance autonomous surface vessels for ISR and oceanographic data. Strong DoD pull-through after the 2024 deployment for the Bahrain-based 5th Fleet. Raised $60M Series C in 2024. |
Skydio skydio.com | San Mateo | Largest US small-UAS manufacturer. Pivoted from consumer to enterprise and defence in 2020-22. Raised $230M Series E in 2024; placed on China's Entity List in late 2024 leading to a battery-supply scramble. |
Epirus epirusinc.com | Torrance | Solid-state high-power microwave counter-drone systems (Leonidas). Raised $66M extension in 2024. Selected by the US Army for the IFPC-HPM program with deliveries through 2025. |
Mach Industries machindustries.com | Huntington Beach | Hydrogen-propellant munitions and uncrewed strike systems. Raised $79M Series A in 2024 led by Khosla Ventures and Sequoia. Founded 2023 by Ethan Thornton out of MIT; one of the most aggressive new defence-tech entrants. |
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Key DefenseTech market trends
NATO defence commitments, the venture capital floodgates and Ukraine drone procurement at scale are reshaping defence tech right now.
NATO 2-3.5% GDP defence commitments
Germany committed to 2% of GDP, the Netherlands to 2%, Poland to 4% in 2024-25. The Hague NATO summit in 2025 set a longer-term path toward 3-3.5% as a baseline. Aggregate European defence spending crossed $400B in 2024 per IISS data, the highest since the Cold War. Dated July 2025.
Venture capital floodgates
Defence-tech absorbed an estimated $40B in venture funding globally in 2024 per PitchBook, up roughly 5x versus 2019. Anduril at $14B, then $30B in 2025; Saronic at $4B; Helsing at $5.4B; Shield AI at $5.3B; Mach raised $79M Series A. Founders Fund, General Catalyst and Andreessen Horowitz are dominant capital sources. Dated March 2025.
Ukraine drone procurement at scale
Ukraine produced over 2 million drones in 2024 across hundreds of domestic suppliers; US and EU foreign military aid flowed to over 50 venture-backed suppliers including AeroVironment, Skydio, Quantum Systems and Helsing. The conflict has become the largest combat-validation platform for Western defence-tech in modern history. Dated December 2024.
CCA program awards
The USAF awarded Increment 1 Collaborative Combat Aircraft contracts to Anduril (Fury) and General Atomics (XQ-67A) in 2024, beating Lockheed, Boeing and Northrop. The first major US fighter-adjacent program awarded to a venture-backed challenger and a watershed moment for the new defence-tech cohort. Dated April 2024.
Replicator initiative
The DoD's Replicator initiative announced in 2023 committed to fielding thousands of attritable autonomous systems by August 2025. The program funded contracts at Anduril, Saronic, AeroVironment, Performance Drone Works, Skydio and Shield AI through 2024 and 2025. Dated January 2025.
European AI Action Plan and German Bundeswehr funding
Germany's €100B Sondervermögen continued to deploy through 2024-25, funding production contracts for Helsing, Quantum Systems and Rheinmetall. The EU's defence-tech and AI funding plans elevated Helsing, ARX Robotics and Tekever into preferred-supplier status. Dated September 2024.
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