Our new European SecureTech Sector Insights provide a comprehensive analysis across market trends, valuations, financing and M&A activity, diving deep into how Defense Technology and Cyber Security Software are structurally converging into one integrated security technology ecosystem reshaping capital allocation and becoming a large investment theme.

• European Defense Technology market map includes 265 companies categorized in four distinctive subverticals across 28 European countries
• European Cyber Security Software market map covers 668 companies categorized in six distinctive subverticals across 30 European countries

One ecosystem, five convergence vectors

This development is visible in converging technology stacks, capital formation, threat environment, buyers and end markets as well as structural drivers like policy spending.

Modern defense systems and cyber security platforms now share the same software-defined foundations: AI and decision intelligence, secure cloud and encrypted networks, and integrated mission software.

Venture Capital and M&A activity increasingly target dual-use platforms spanning both sovereign and enterprise markets, with valuations driven by software economics, AI capability, and long-term strategic positioning rather than hardware contract cycles.

The threat environment has reinforced this dynamic. Modern conflicts integrate kinetic, cyber, electronic, and information warfare simultaneously – and national security priorities now extend to critical infrastructure, supply chains, and digital sovereignty. Governments, infrastructure operators, and large enterprises are aligning around shared resilience mandates, with policy spending accelerating across all of them. As our report stresses:

"The debate is no longer about whether to invest in defense technology. It has shifted to building scalable, interoperable European capabilities at speed."

A new industrial model is taking shape

Innovation in defense technology is increasingly originating outside the traditional prime contractor ecosystem. Autonomous systems, data-driven decision support, and software-defined architectures – once experimental – are now operational reality, brought to market by a new generation of venture-financed defense and dual-use deep tech companies that have introduced speed, product focus, and scalability into a historically complex sector.

These companies are not displacing incumbents outright. Instead, the industrial landscape is evolving toward hybrid models that combine start-up agility with incumbent expertise in certification, production, and global delivery. Venture-backed players are accelerating this through targeted acquisitions and partnerships – using them to fast-track certification and approval processes, broaden product portfolios, and bring export-ready systems to market faster than legacy procurement cycles would allow.

Nowhere is this shift more pronounced than in Europe. Evolving NATO burden-sharing expectations have exposed critical capability gaps – in air defense, ISR, space, and autonomous systems – and triggered a spending response that our analysis indicates is structural rather than episodic.

Europe's Strategic Autonomy Drive

At the same time, Europe is actively reducing its dependency on US systems. The share of EU defense spending directed at non-EU equipment is expected to fall from 78% in 2023 to 50% by 2030 and 40% by 2035, as governments build out domestic industrial capacity.

Hendrik Kramer, Co-Founder and former CEO of FERNRIDE (acquired by Quantum Systems in December 2025, Europe's leading AI-powered unmanned systems company) stressed:

"Traditionally, Europe was dependent on technology from the US and relied to a large extent on a supply chain from China. The gap is material but not irreversible. Europe has world-class engineering talent and industrial depth. When we combine those skills with the innovation velocity in Ukraine, and even do this together with them as one team, Europe can lead globally."

Capital formation across the sector reflects this momentum. Venture and growth funding volumes are rising, strategic and private equity interest is intensifying, and valuations are expanding accordingly. Germany's trajectory is particularly illustrative: its share of total EU defense tech fundraising rose from 4% in 2019 to 11% in 2024 – a signal of both the sector's maturation and the geographic broadening of investment activity beyond historically dominant hubs.

Structural challenges persist – fragmented procurement, talent shortages, and export restrictions remain real friction points. But our industry conversations suggest these are increasingly viewed as execution challenges rather than fundamental barriers to growth.

Cyber security: More Complexity, More Exposure – More Demand

On the cyber security side, demand is structurally accelerating for its own reasons. AI is simultaneously raising attacker capability and enabling more sophisticated defense – expanding the addressable market. Geopolitical tensions are driving digital sovereignty requirements into enterprise and government procurement alike. And as digital complexity grows, so does the attack surface, requiring integrated, multi-layer protection architectures rather than point solutions.

What is inside the report

The full report covers: comprehensive market maps by sub-vertical for both sectors; valuation and financing trends; M&A activity and deal flow analysis; perspectives from various industry leaders; and our detailed investment thesis on why Defense Technology and Cyber Security Software represent a durable, non-cyclical allocation opportunity.