FRONTLINE INSIGHTS & CURRENT INVESTMENT GAPS IN DEFENSE TECH, APRIL 2025

This report provides a frontline-based assessment of the current landscape of defense technology, drawn directly from operators, commanders, and technologists embedded in active combat zones. By focusing on real-time feedback from the field — particularly Ukraine — this report identifies which technologies are proving effective, where critical capability gaps remain, and where we would encourage future investment and innovation to be directed.

Since 2019, VC investment in defense start-ups in NATO countries has increased fourfold, rising to

$3.9bn by the end of 2024. The US accounts for 83 percent of VC defense tech investment, with EU countries and the UK recording 15 percent since 2018. The US Department of Defense has taken steps to access commercial technology through new acquisition and budgeting authorities: for example, increasing the prominence of the Defense Innovation Unit and establishing the Replicator initiative in 2023 to rapidly field autonomous, attritable systems. NATO has formed an innovation accelerator (DIANA) to foster collaboration with start-ups and other tech companies, and has announced the €1 billion NATO Innovation Fund focused on dual-use technologies. While the overall flow of capital into defense tech has surged in recent years, it has not always aligned with operational urgency. Certain categories, such as drone platforms and ISR (intelligence, surveillance, reconnaissance) software, are oversaturated, attracting flow of capital despite diminishing returns or clear redundancy. At the same time, less glamorous but strategically vital domains — such as electronic warfare, mine clearance, anti-drone systems, secure comms, logistics, and power management — remain chronically underfunded and underdeveloped.

This reflects a broader disconnect between investor perception and frontline reality, where funding decisions are shaped by business narratives, not battlefield outcomes. This report aims to anchor investment strategy in real-world utility by highlighting which technologies are being used effectively in Ukraine, which are not, and what’s urgently needed next.