Investment in defence tech start-ups has reached a record high this year as the world’s biggest arms companies step up spending on new military technologies. New figures from Dealroom show defence contractors including BAE systems, Lockheed Martin and Airbus have participated in $ 4.1 billion (£3 billion) of venture capital funding rounds so far this year, the highest figure on record.
Meanwhile, separate research from law firm White & Case found 42 defence mergers and acquisitions were completed globally in the first half of 2026, up 56 per cent from the same period last year.
Daniel Turgel, co-head of White & Case’s Global Technology Industry Group, said the sector was seeing strong demand for companies developing AI, cyber security and autonomous system.
“With AI, autonomous systems, space-based sensing and cybersecurity redefining how conflicts are fought and won, the race to acquire and invest in defence technology is intensifying,” he said.
Turgel added that higher defence budgets and record levels of private capital meant investment and dealmaking were likely to remain strong beyond 2026. The figures came after several investments by defence manufacturers in recent weeks.
Lockheed Martin recently pledged at least $ 100 million for UK and European defence technology start-ups and expanded its venture investment fund from $ 400 million to $1 billion. BAE systems have committed 50 million euros to two European venture funds focused on defence, while Airbus has become the anchor investor in a new fund backing defence technology.
German drone maker Quantum Systems raised $1.2 billion earlier in July at a valuation of about $8 billion, while UK maritime defence business Kraken Technology secured $175 million at a $ 1 billion valuation with backing from Rheinmetall.
Andy Burnham has indicated defence will remain a spending priority for the government after he appointed former defence secretary John Healey as chancellor in July. In his first speech as prime minister, Burnham recommended the UK to hike defence spending from 2.6 per cent of GDP to the Nato target of 3.5 per cent by 2035.
Bankers are scouring the UK for potential deals to capitalise on the predicted rise in government investment and a surge in demand from investors.
It was revealed recently that Leicestershire based aerospace drilling company Tek4 had appointed bankers at Panmure Liberum to handle an IPO later this year, in a boom to the London Stock Exchange as it hopes to tempt more defence firms to market.
Elsewhere – Wealthy Brits are bracing for a shake-up of the tax system, as the prime minister looks for ways to fund fresh spending commitments. Prior to taking office, Andy Burnham had already hinted at plans over how the country should be taxed.
While changes could assist lower rate taxpayers, wealthier Brits could be expected to shoulder a greater tax bill, which could trigger a further wealth exodus. The number of millionaires in Britain has sunk to its lowest level since the 2008 financial crisis as rich residents flee the country due to high levels of tax and the removal of non-dom status, a fresh study has claimed.
Some 442,000 millionaires were listed as residents in Britain in 2025, a seven per cent drop on the previous year, a report from the Adam Smith Institute (ASI) found.
Record levels of taxation, a mooted wealth tax, and the removal of non-dom status in 2025, have all contributed to the flight of rich Britons in the past two years, the free market think tank said.
The report also found the fall in millionaires is being driven by falling real estate prices, a low household savings rate and the emigration of high net-worth individuals.
Responding to the report, shadow business secretary Andrew Griffith said: “Everyone should care about Britain having fewer millionaires to contribute to the tax pot and creating jobs and businesses here.
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