Germany to invest directly in defence startups through new state-backed fund
Germany is preparing to take direct financial stakes in defence startups as part of a new strategy aimed at strengthening its military technology sector and accelerating innovation in security-related industries.
The German government announced on Wednesday the creation of an investment fund that will allow the state to become a shareholder in emerging defence companies, marking a significant shift in Berlin’s approach to supporting private-sector development in the defence field.
The initiative comes as Germany and other European countries seek to rebuild their defence capabilities after years of limited investment. The war in Ukraine and growing uncertainty over long-term security commitments from the United States have pushed European governments to reassess their strategic autonomy.
Germany’s Economy Ministry said the new mechanism is designed to address challenges faced by defence startups, particularly difficulties in accessing private capital. Economy Minister Robert Habeck highlighted that Germany remains behind the United States when it comes to venture funding for innovative companies in the sector.
By taking direct stakes in startups, the government hopes to provide financial support to companies developing advanced military technologies, including autonomous systems, robotics, artificial intelligence and other emerging defence solutions.
The move reflects a broader European trend toward closer cooperation between governments and technology firms as countries attempt to modernize their armed forces and reduce dependence on foreign suppliers.
German defence startups have increasingly attracted attention as demand grows for new capabilities, including unmanned vehicles and digital battlefield technologies. Companies developing innovative solutions have often struggled, however, to secure the level of investment needed to expand rapidly.
The new fund is expected to become part of a wider effort by Berlin to strengthen domestic industrial capacity and ensure that strategically important technologies remain available within Germany and Europe.
The government’s decision signals a more active role for the state in shaping the future of the defence sector, moving beyond traditional procurement policies toward direct participation in industrial development.
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