The convergence of technological advances, geopolitical challenges, and the need to strengthen critical infrastructure is driving a new investment cycle in the defense and space technology sectors.
Startups that previously operated almost unnoticed by investors are now at the center of attention for venture capital funds, institutional investors, and governments, who see enormous potential for growth, consolidation, and business model transformation.
Fresh Capital for Strategic Startups
The KPMG report “Emerging Trends in Aerospace and Defense 2025” highlights that in Europe, for example, “massive investment plans” have been announced for defense companies, creating a favorable environment for technologically capable startups to integrate, grow, or transform.
Meanwhile, in the space sector, the consultancy Seraphim Capital reports that global investment reached $3.5 billion in the third quarter alone, reflecting a rapidly accelerating market.
In defense technology, NATO country data registers over $9.1 billion in venture capital financing in 2025, already surpassing the total for 2024.
Key Sectors with High Expectations
Several areas are attracting special attention in this new context:
- Autonomous systems, drones, and smart sensors as the backbone of future defense.
- Space infrastructure, with applications in secure communications, observation, and global positioning.
- Dual-use technologies, originating in the civilian sphere and finding critical defense applications (and vice versa).
- Geographic diversification, with Europe gaining ground against the traditional dominance of the United States, and new investment and consolidation opportunities at play.
Real Cases Exemplifying the Dynamics
These trends go beyond theory. Investments are reaching specific startups that are already reshaping the sector.
- Epirus, a North American startup specializing in anti-drone systems, raised $250 million in a Series D round in March 2025 to scale production of its “Leonidas” line.
- According to a 2025 report, European defense tech companies have raised approximately $1.5 billion this year, highlighting strong capital interest in the area.
- In the space sector, global investment in the third quarter reached a record $3.5 billion, reflecting how new launch, low-orbit satellite, and space services startups are entering the market with strength.
- In Europe, the acquisition of Swiss company Daedalean by Destinus for $225 million is one of the year’s largest moves in “defense tech.”
- Another example: European startup Look Up (specializing in orbital security and surveillance) closed a €50 million round in June 2025 to launch its global network of space radars and “Space-Operations-as-a-Service.”
A Moment of Maturity and Opportunity
This boom is no coincidence. A cycle shift is underway, where budget momentum, technological demand, and market evolution converge. Governments are increasing investment in strategic capabilities, while technology startups leverage their agility and specialization to occupy spaces once dominated by large contractors.
Additionally, many of these companies have already surpassed the initial stage: they have proven technology, validated business models, and international ambition. They thus become natural candidates to integrate into larger structures, consolidate in key niches, or lead new sector verticals.
Transformation is also reaching the space sector, where innovation is no longer limited to exploration or institutional use. Next-generation satellites, advanced sensors, and analytics platforms are creating scalable business models with both civil and military applications. Space, literally, is being commercialized.
Opportunities for Entrepreneurs, Investors, and Buyers
For entrepreneurs, the current moment represents a strategic opportunity to access capital, scale operations, or explore alliances with major industry players. For investors, it is essential to identify startups that not only offer advanced technology but also fit into complex ecosystems and generate long-term value.
And for buyers, this environment is conducive to strategic moves that strengthen capabilities, accelerate innovation, and ensure positioning in key markets. The key is no longer just detecting opportunities, but accompanying the integration process, preserving value, and enhancing scalability.
Towards a Phase of Strategic Consolidation
With more mature startups, available capital, and an urgent need for technological capabilities, everything indicates we are entering a phase of intense consolidation. M&A operations will not only grow in volume but also in sophistication: the secret will be to identify real synergies, complement knowledge, and build stronger structures.
The companies capable of thinking in terms of strategic integration—beyond the deal’s closure—will be the ones leading this new industry phase.
Investing with Vision in Sectors That Define the Future
For Pipeline Capital, “The defense-space binomial has become one of the most dynamic investment frontiers today. With capital flowing in, emerging technologies, and a market demanding renewal, the coming years offer highly relevant opportunities for those who know how to read the context, anticipate trends, and accompany the growth and integration process.”
“The strategic use of technology, international scale, and business vision will make the difference between participating and leading the new paradigm,” says Carlos Gómez, Europe Partner at Pipeline Capital.
