In recent months, the defense industry has taken on an unexpectedly prominent role in tech investment conversations. Global military spending has surged reaching record levels in NATO countries, as confirmed during the recent summit in Washington. At the same time, the stock market performance of major defense-focused companies has drawn attention: Rheinmetall (+72% Year-To-Date), Palantir (+61% YTD), Indra (+45% YTD), and Thales (+34% YTD) have all seen significant gains. For years, this sector remained off the radar of most venture capital firms. But now, the landscape is shifting: startups are turning their eyes toward defense, and tech investors are overcoming their past hesitations.
Although the word “Defense” often conjures images of warfare or weaponry, the scope of this sector is far broader. From critical infrastructure and cybersecurity to dual-use technologies, urban mobility systems, and healthcare solutions for extreme environments, the defense sector intersects with many of the core themes to be explored at VDS: Cybersecurity, DeepTech, Aerospace, Future of Energy… among others.
In fact, many everyday technologies have roots in military research. Think about canned food, the microwave, GPS, nylon… or even the Internet itself. What once emerged from defense-related innovation has become integral to civilian life. Who knows if the next wave of dual-use technologies may follow a similar path, starting in a bunker and ending up in our pockets.
From taboo to strategic opportunity: what VC’s say about Defense
Historically, many venture capital firms avoided the defense sector whether due to ethical concerns, regulatory complexities, or simply a lack of familiarity. But that narrative is beginning to shift, and some of the industry’s most prominent voices are now speaking openly about it.
“We’re not investing in weapons. We’re investing in dual-use technologies that strengthen the resilience of our societies”, said Alex Karp, CEO of Palantir, a company whose analytical software has surged in adoption and valuation thanks to its applicability across both civil and military domains.
On the investor side, Andreessen Horowitz recently published a widely discussed piece arguing that startups reinforcing the technological autonomy of the West deserve active support. “Defense isn’t just about protecting countries. It’s about protecting values”, stated the firm in its American Dynamism thesis. A must-read publication to understand about the role technology and entrepreneurship should play in strengthening Western democracies, according to the fund.
Within this framework, Katherine Boyle, general partner at a16z, has taken the lead on building a portfolio that includes companies in aerospace, cybersecurity, public health, critical infrastructure… all of them sectors that have clear dual-use potential and align with national security priorities. Her stance marks a growing belief that venture capital has a critical role to play in reinforcing democratic resilience through innovation.
If one of the world’s top VC firms is embracing this sector, it makes sense for VDS to do the same. That’s why this year’s edition will shine a spotlight on defense-related sub-sectors, startups, and real-world applications to help rethink how we see this once-taboo industry.
What does a startup have to do with defense?
More than you might think. Many of the challenges facing modern defense are technological and that’s where startups can truly make an impact. Some of the most dynamic verticals worldwide (and represented at VDS this October) include:
1. Cybersecurity & Defence
Cyberattacks, disinformation, and the protection of critical digital infrastructure are pressing national concerns. Startups focused on threat detection, AI-powered security, or advanced cryptography are finding growing opportunities in both government and defense markets. Valencia is at the forefront thanks to expert companies like S2 Grupo, or the INCIBE-UPV programs supporting cybersecurity startups. It’s also attracting international players, such as Norwegian startup Pistachio.
2. Aerospace Technologies
Microsatellites, Earth observation, remote communications, and uncrewed air traffic management are part of the fast-growing New Space economy, tightly connected to sovereignty and defense. Europe is home to leaders like ICEYE (Finland), D-Orbit (Italy), and PLD Space (Valencia), whose MIURA 1 became in 2023 the first private European rocket to reach space.
3. Smart Cities & Digital Infrastructure
Urban surveillance, traffic control systems, and secure communications networks all contribute to city resilience, with applications in both civil and military contexts. Zeleros, a Valencian hyperloop startup, is a good example of this dual-use innovation.
4. HealthTech & Longevity
Portable medical devices, remote diagnostics, technologies for extreme environments, and advanced health logistics are essential for both military and disaster response. Robotic exoskeletons, for instance, could serve rehabilitation in both civilian and military settings.
5. Talent & Future of Work
Virtual simulation training, AI decision-support tools, collaborative robotics, and next-generation technical education are transforming defense workforces and also have industrial and civilian applications.
6. Future of Energy & GreenTech
Autonomous energy systems, microgrids, long-life batteries, and alternative fuels are essential for sustainable military operations. In a world where energy and data consumption keep rising, even the biggest tech firms are developing their own renewable energy solutions and power stations.
7. DeepTech & Scientific Innovation
From quantum sensors to novel materials and algorithms designed for extreme conditions, scientific breakthroughs are at the heart of 21st-century defense. Read more in our recent article on Europe’s (and Valencia) DeepTech scene.
VDS, the role of the tech ecosystem in Defense
VDS is a great example of how the defense conversation is expanding to include civil society and the broader innovation ecosystem. Far from outdated clichés, today’s vision of defense is increasingly linked to resilience, technological sovereignty, and sustainability, not just armed conflict.
For startups, this opens up a space for real impact: applying cutting-edge technology to strategic domains that contribute to security, digital autonomy, and collective well-being. And for investors, a new opportunity for profitability with purpose.
