The rise of dual use technology – innovations with both civilian and military applications – is reshaping the global tech landscape.

What began as a niche domain is now emerging as a priority area for governments, investors, and startups alike. The drivers are clear: rising geopolitical tensions, increased defense budgets across NATO countries, and a growing recognition that critical military capabilities – from AI-enabled surveillance to autonomous systems and advanced communications – will come not only from primes, but from agile startups.

Europe is catching up.

In 2024 alone, the EU committed €1.5B to defense-related R&D through initiatives like EDIRPA and the European Defence Fund. National programs are expanding too: the UK pledged £400M for defense innovation, while Germany doubled its military procurement budget. The NATO Innovation Fund, with its €1B war chest, has started backing dual use startups across member states.

Countries are catching up, some faster than others.

Estonia is the most recent example of a small but highly digitized country embracing dual use innovation, integrating local startups into its defense ecosystem. But it’s far from alone. Israel pioneered this model, leveraging military-born innovation into a startup powerhouse, while the U.S. maintains a growing network of programs and accelerators (DIU, AFWERX, NSIN) aimed at integrating commercial tech into defense.

Despite increased funding, procurement still follows outdated models, creating a “Valley of Death” for startups after initial pilots.

Yet challenges persist. As Kadi Silde of Helsing notes, adoption is slow because:

• Many armed forces are unaccustomed to working with TRL 6-stage startups;
• Startup fragility raises real concerns about survivability;
• Scaling and field deployment remain major bottlenecks. Defence startups can’t go it alone. Most lack the infrastructure to scale hardware production.

This report expands on the analysis we conducted in 2024 on the state of defense and dual use tech across NATO and allied countries – examining where capital is flowing, which technologies are gaining traction, and how policy, procurement, and private sector alignment can help unlock the full potential of this critical innovation frontier.

In addition, we conducted a dedicated analysis of all VC funds globally that invest in dual use startups. We identified 54 such funds. Nearly half (48%) are based in the United States, with the United Kingdom following at 11%. Not surprisingly, another 15% are located in Ukraine, the Baltics, and Eastern Europe – particularly Poland and Czechia – reflecting the region’s heightened focus on defense and security innovation. We also created a dedicated, searchable directory to provide access to the most up-to-date list (here is the link to access).