BERLIN / LONDON (IT BOLTWISE) – The German defense industry is experiencing change as more and more startups develop innovative technologies that are shaking up the market. While established companies like Rheinmetall continue to dominate, young companies are gaining traction by focusing on drones and artificial intelligence. This development is supported by increasing investments in the defense sector.
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The German arms industry is facing profound change. While large companies like Rheinmetall traditionally dominate the market, startups that come up with innovative technologies are increasingly entering the sector. These young companies are primarily focused on drone technology and artificial intelligence, which could have a significant impact on the way Germany designs its defense.
The war in Ukraine highlighted the need to prepare for new forms of warfare. The federal government plans to double its defense budget to 162 billion euros by 2029. This increase in spending has also piqued the interest of venture capitalists, who are now willing to invest in the defense sector, long considered a taboo subject.
A survey by the NATO Innovation Fund shows that Germany is now leading Europe in private investments in defense and security technology. In 2024, around 1.3 billion US dollars flowed into German startups that develop high-tech solutions for Europe’s security. This development could shake the dominance of the established defense companies.
Startups like Helsing, Quantum Systems and Stark are examples of companies that are shaking up the market with their specialized technologies. These companies rely on rapid product development and flat hierarchies, which make them attractive employers for young talent. At the same time, they could further strengthen their position through takeovers such as Helsing’s takeover of the Bavarian aircraft manufacturer Grob Aircraft.
However, the future of defense startups depends heavily on the further course of the war in Ukraine. If the threat level decreases, investment in defense could decrease. Nevertheless, experts agree that defense startups will be an integral part of the future as drivers of technological innovations.
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