Berlin is spearheading a new era of military innovation in Europe, with defence startups like Helsing leading the charge as the continent races to modernize its security infrastructure in response to the war in Ukraine.

Founded just four years ago, Munich-based Helsing has become Europe’s most valuable defence startup, recently doubling its valuation to $12 billion. Co-founder Gundbert Scherf, a former McKinsey partner, says Russia’s invasion of Ukraine has pushed European governments—especially Germany—into a once-in-a-generation shift.

“For the first time in decades, Europe is spending more on defence tech acquisition than the U.S.,” Scherf noted.

Germany, long cautious about military expansion due to its history, is undergoing a radical rethink. Chancellor Friedrich Merz’s administration plans to nearly triple the defence budget to €162 billion by 2029, aiming to meet NATO’s 3.5% GDP target. The government is fast-tracking procurement laws to connect agile startups directly with military leadership, cutting red tape and offering advance payments to help emerging firms scale.

A new ecosystem of defence startups is flourishing. From AI-powered battlefield robots and unmanned mini-submarines to cyborg “spy cockroaches,” German innovators are turning science fiction into strategic assets. “We want to help give Europe its spine back,” said Scherf.

Germany is now home to three unicorn defence startups: Helsing, drone maker Quantum Systems, and Portugal’s Tekever. Investors are taking notice—venture capital funding for European defence tech soared to $1 billion in 2024, with German firms receiving the largest share.

As the country’s automotive sector slows, engineering talent is pivoting to defence. “Startups bring the brains, and the German Mittelstand brings the muscle,” said Stefan Thumann, CEO of drone munitions maker Donaustahl.

Berlin’s message is clear: defence innovation is no longer just about security—it’s about economic resilience, sovereignty, and leadership.