Germany is undergoing a sweeping transformation in its approach to defence, as the government pours billions into military innovation and accelerates the rise of high-tech startups like Helsing, now Europe’s most valuable defence technology firm.
Munich-based Helsing, co-founded by Gundbert Scherf, has seen its valuation more than double to $12 billion following a recent fundraising round. The company, which builds AI-driven battlefield technology and strike drones, struggled for early investment but has become a symbol of Europe’s newfound urgency in rearming.
“Europe is now spending more on defence tech acquisition than the United States,” said Scherf. “It’s a moment comparable to the Manhattan Project.”
Germany, historically reluctant to embrace militarisation, is now committing to reshape its defence landscape. Chancellor Friedrich Merz’s administration has pledged to triple the country’s regular defence budget to €162 billion by 2029. The government is also streamlining bureaucracy and opening defence tenders to startups — marking a clear shift from its traditional reliance on large contractors like Rheinmetall.
At the core of this pivot is a determination to develop homegrown, cutting-edge technologies. Germany’s defence ministry has identified AI and drones as key priorities. “The changes they’re bringing to the battlefield are as revolutionary as the tank or machine gun,” said Annette Lehnigk-Emden, head of the military’s procurement agency.
Among the innovations are battlefield-ready autonomous robots, cyber tools, and even “spy cockroaches” — bio-robots equipped with cameras and neural stimulation for surveillance in hostile environments. Stefan Wilhelm, CEO of Swarm Biotactics, said these AI-controlled insects are already in advanced development.
The war in Ukraine has helped shift public perception. “Germany has developed a new openness to defence,” said Sven Weizenegger, who heads the Bundeswehr’s Cyber Innovation Hub. LinkedIn requests to collaborate on defence tech, he noted, have increased tenfold since 2020.
Venture capital is also pouring in. Funding for European defence startups rose to $1 billion in 2024 and is on track to surpass that this year. Germany leads the region, with $1.4 billion in startup investment over five years — bolstered by its deep engineering expertise and surplus industrial capacity from a struggling automotive sector.
With the U.S. commitment to NATO uncertain under President Trump, Berlin is accelerating its own capabilities. It is also pushing for more pan-European defence cooperation and reducing reliance on U.S. firms. A new draft procurement law will allow upfront payments to startups and restrict tenders to EU firms — a bid to nurture domestic champions.
For many in Germany’s tech and defence sectors, this moment is not just about national security — it’s also about economic reinvention. “A strong defence base means a strong economy and innovation on steroids,” said Markus Federle of Tholus Capital.
From AI drones to battlefield bio-robots, Germany’s defence startups are no longer on the sidelines — they’re at the heart of Europe’s military and industrial revival.
