European defense-tech startups have raised a record $7.4 billion this year, and American investors supplied almost half of it. Days earlier, the US Army put new weight behind a program that invests its own capital in companies. For most of the postwar era the government was defense tech’s customer. It wrote the requirements, ran the competition, and signed the contract. Now it shows up on the cap table. Europe calls this sovereignty. The Army calls it strategic capital. Both describe the same move, and it changes how a dual-use company should raise money.
The Deep Dive: The Government Joined the Cap Table
Europe’s record year is a sovereignty paradox
On October 5, Dealroom and Resilience Media released The State of Defence Tech 2026 at a conference in London. European defense-tech startups have raised $7.4 billion so far this year. That is close to three times the $2.6 billion they raised in all of 2025. The report projects $10.5 billion by year end. Defense tech is now 11 percent of all European venture capital, up from 4 percent a year ago. It is the fastest-growing sector on the continent.
The money is lopsided. Seven rounds of $1 billion or more make up more than 85 percent of the total, led by Helsing’s $1.8 billion raise in July. The NATO Innovation Fund was the single most active investor. Specialist defense funds joined a quarter of all rounds this year, up from 18 percent in 2025.
Here is the paradox. European leaders frame this as a sovereignty project. “If we want to build and retain critical defence capabilities in Europe, we also need sovereign European financing,” said Klaus Hommels of Lakestar. Yet American investors now supply 47 percent of European defense-tech funding, up from 17 percent in 2020. Across NATO and allied countries, US startups took 75 percent of all defense venture dollars. Europe wants to own its defense base. It is paying for much of it with American capital.
The Army put itself on the cap table
The US mirror image is the Army’s Strategic Capital Initiative, launched in March and now signing its first partnerships. The pitch is blunt. The Army invites “industry leaders, investors, and innovators to co-invest with us.” Its stated goal is to “supplement traditional funding with strategic capital,” building ventures that can stand on their own. Asked on its own site whether it acts as customer, co-investor, or landlord, the Army answers: any combination of the above. It will “consider taking an equity stake.”
This is not a grant program. It is the government structuring deals where a commercial market and a military need share one asset. Then it takes a piece of the upside. The Army is doing at home what the NATO Innovation Fund does in Europe. It puts public money next to private money, early, and asks for a return.
The precedent is older than venture capital
Government equity in strategic industry is not new. The Reconstruction Finance Corporation capitalized industry through the 1930s. The Defense Plant Corporation built and owned war plants from 1940 to 1945, then sold them to private operators. In 1999 the CIA chartered In-Q-Tel to take the startup stakes it could not reach through contracts. In-Q-Tel is a returning investor in Armadin’s round this week, which sits in the ledger below. What is new in 2026 is the scale and the breadth. A NATO fund, national sovereign vehicles, a US Army balance sheet, and the primes are all buying equity at once.
The Investment Takeaway
Public capital on the cap table is a tailwind for dual-use, not a threat, if you are early and local. The mega-rounds prove the thesis and skip the middle. Eighty-five percent of Europe’s record went to seven companies. The US took three quarters of the NATO total. Sovereign and strategic funds follow proof. They rarely create it. In the UK, small firms won just 4 percent of the Ministry of Defence’s direct industry spending last year. German procurement still favors incumbents. The gap between a first check and a program of record is wide, and getting wider.
New North Ventures writes into that gap. Our edge is the first institutional check into a Northeast dual-use company. We come in early, before a NATO fund, an Army co-investment, or a prime’s venture arm shows up for the next round. The state is moving from customer to shareholder. Capital is moving across the Atlantic in both directions. The scarce thing is still the early, regional investor who backs a company two years before the government wants to own it.
The Funding Ledger
Six dual-use rounds from the past week, then the pattern underneath them.
Armadin, $255 million Series B at a valuation above $2.5 billion, co-led by Andreessen Horowitz and Accel, with In-Q-Tel among returning backers. The Palo Alto company runs swarms of AI agents that attack and defend enterprise networks.
General Intuition, $220 million at a $6.2 billion valuation, led by Valor Equity Partners and Atreides. The New York lab trains models on video and virtual worlds so machines can act in the physical world. Robotics and simulation are among its first partners.
PaleBlueDot AI, $200 million Series C at $3.2 billion, led by ComputeCore. The Palo Alto firm rents GPU clusters and brokered compute for AI workloads.
Fortem Technologies, $50 million Series B led by Lockheed Martin, with Unusual Machines. The Lindon, Utah company builds counter-drone radar, command software, and net-firing interceptor drones, and is a Department of Homeland Security counter-drone prime.
Flow Engineering, $50 million Series B at $750 million, co-led by Valor and Atreides with Sequoia. The San Francisco company sells systems-engineering software to hardware teams in defense and space, including Anduril and Castelion.
Certo Aerospace, £5 million from new and existing shareholders. The UK company is building an autonomous heavy-lift aircraft and works with BAE Systems and the Ministry of Defence.
Armadin, General Intuition, and PaleBlueDot took about $675 million between them for software, models, and compute. Certo, the only hardware-led round, took roughly one percent of that. A prime led the counter-drone round. A CIA-backed fund sat in the cyber round. The government and the primes are already on these cap tables. Five of the six companies are American. The US owns the mid-tier, and Europe’s record rides on a handful of giants.
The Northeast Desk
The region’s fresh defense money this week went to Maine. FMI Solutions of Biddeford had $14 million added to an Air Force contract on September 29 to test hypersonic thermal-protection materials, the composites that keep a vehicle intact through reentry heat. It is a small modification with a long tail. The materials base is the kind of niche supplier public capital is now built to shore up.
In New Hampshire, the week’s contract was a follow-on. A week after BAE Systems launched its Shadow EW line in Nashua, covered in last issue, the same site won a $147 million Air Force contract, announced September 30, for 40 Eagle Passive Active Warning Survivability System kits that protect Lot 7 and Lot 8 F-15EX fighters, reports The Defence Blog. The suite is built in Nashua, and the Air Force obligated $59 million at signing. BAE employs more than 6,700 people in New Hampshire, part of a state defense base of about 300 companies and 10,500 jobs.
Watch the calendar
The MassChallenge Dual-Use Symposium is November 5 in Boston, with DARPA’s Small Business Programs Office attending and tracks in counter-drone, bluetech, energy resilience, and bio defense.
Portfolio Corner: Onsights
Onsights, based in Reston, Virginia, runs computer vision on the security cameras a building already owns. Its software turns existing footage into anonymous movement data: where people go, where they stop, how they move through a space. The commercial pitch is retail and venue analytics. It is the physical-world answer to the web-traffic dashboard every online store takes for granted. Footage is processed in the cloud and discarded, so the output is the pattern, not the person.
The dual-use read is direct. The same software that measures how shoppers move through a mall measures how people move across a base perimeter, a port, or a flight line. Force protection and physical security are the same computer-vision problem as foot-traffic analytics, run against a different floor plan. Onsights needs no new sensors. It upgrades hardware the customer has already installed.
It is the kind of company public capital is now built to reach: commercial first, defense adjacent, running on infrastructure that already exists. A sovereign fund or a service co-investment does not have to bankroll a decade of hardware here. The product already sells. The government’s job is to become a customer, and increasingly an early shareholder, in software that was going to exist anyway.
New North Ventures is an investor. Onsights keeps a low public profile, so its funding, named customers, contracts, and headcount are held and not reported here.
More links to explore
European defense-tech funding hit a record $7.4 billion in 2026, per Dealroom and Resilience Media.
The US Army is inviting industry to co-invest through its Strategic Capital Initiative.
Kevin Mandia’s Armadin raised $255 million for autonomous cyber “agent swarms,” reports SecurityWeek.
Lockheed Martin led Fortem’s $50 million counter-drone round, reports KSL.
BAE Systems in Nashua won a $147 million F-15EX electronic-warfare contract, reports The Defence Blog.