For Gundbert Scherf – the co-founder of Germany’s Helsing, Europe’s most valuable defence start-up – Russia’s invasion of Ukraine changed everything. Scherf had to fight hard to attract investment after starting his company – which produces military strike drones and battlefield AI – four years ago. Now, that’s the least of his problems. The Munich-based company more than doubled its valuation to $12 billion at a fundraising last month. “Europe this year, for the first time in decades, is spending more on defense technology acquisition, opens new tab than the U.S.,” said Scherf. The former partner at McKinsey & Company says Europe may be on the cusp of a transformation in defence innovation akin to the Manhattan Project – the scientific push that saw the U.S. rapidly develop nuclear weapons during World War Two. “Europe is now coming to terms with defense.” Reuters spoke to two dozens executives, investors and policymakers to examine how Germany – Europe’s largest economy – aims to play a central role in the rearming the continent.
Chancellor Friedrich Merz’s government views AI and start-up technology as key to its defence plans and is slashing bureaucracy to connect startups directly to the upper echelons of its military, the sources told Reuters. Shaped by the trauma of Nazi militarism and a strong postwar pacifist ethos, Germany long maintained a relatively small and cautious defence sector, sheltered by U.S. security guarantees.
Germany’s business model, shaped by a deep aversion to risk, has also favoured incremental improvements over disruptive innovation.

Full report : German government is looking to spend big money by 2029 on military technology startups in drones and AI robots.