Germany defence tech landscape is undergoing a historic transformation. Long viewed as a pacifist nation due to its WWII legacy, Germany is now at the forefront of a European military innovation boom—powered by AI, autonomous robots, and even cyborg cockroaches. For decades, the country maintained a cautious stance, preferring incremental progress and relying heavily on U.S. defence guarantees. That era is over.
Now, as Russia’s invasion of Ukraine continues to reshape geopolitical dynamics, Germany is investing billions to reinvent its defence sector—with startups like Helsing and ARX Robotics leading the charge.
Unicorns of War: German Startups on the Rise
Germany is now home to two of Europe’s three defence “unicorns”—startups valued at over $1 billion. The most notable is Helsing, co-founded by former McKinsey partner Gundbert Scherf. Helsing specializes in battlefield AI and military strike drones, and recently doubled its valuation to $12 billion in its latest funding round.
“We want to help give Europe its spine back,” says Scherf, who compares Europe’s defence momentum to the urgency of the Manhattan Project—a WWII-era scientific effort that helped the U.S. develop nuclear weapons.
ARX Robotics, another German startup, develops autonomous battlefield machines. Its CEO, Marc Wietfeld, recalls a pivotal meeting with German defence minister Boris Pistorius. “He told me: ‘Money is no longer an excuse – it’s there now.’ That was a turning point,” Wietfeld noted.
Germany’s $175 Billion Military Commitment
Chancellor Friedrich Merz’s government is fast-tracking defence procurement, planning to nearly triple its annual defence budget to €162 billion ($175 billion) by 2029. This is part of a broader European trend—for the first time in decades, Europe is spending more on defence tech acquisition than the United States, according to Helsing’s Scherf.
Germany also committed to meeting NATO’s new defence spending target of 3.5% of GDP by 2029, faster than most allies, especially after Donald Trump’s renewed criticism of America’s NATO contributions.
Slashing Red Tape: New Procurement Laws
Traditionally, Germany’s defence sector favoured large primes like Rheinmetall and Hensoldt, which focus on conventional systems. But that’s changing. A new draft procurement law, expected to pass in July 2025, will remove bureaucratic hurdles for startups by allowing advance payments and restricting tenders to EU-only bidders.
For small startups with limited liquidity, this could be game-changing. According to government sources, these changes will help startups compete on a level playing field with long-established contractors.
From AI Robots to Spy Cockroaches
Germany defence tech innovation goes beyond drones and software. Startups are building AI-driven tanks, unmanned mini-submarines, and in one bizarre but real case—spy cockroaches.
Yes, spy cockroaches.
A startup called Swarm Biotactics is developing “bio-robots”—real insects fitted with miniature neural stimulators, cameras, and secure communication systems. These cyborg cockroaches can collect intel autonomously or be remotely steered into hostile territory.
“Our bio-robots can provide surveillance data from hard-to-reach areas,” said CEO Stefan Wilhelm. “They’re ideal for modern urban and guerrilla warfare scenarios.”
Changing Minds, Changing Markets
Beyond hardware, Germany is seeing a cultural shift. The war in Ukraine has changed public sentiment around military work, and more entrepreneurs are entering the sector. Sven Weizenegger, who leads the Bundeswehr’s Cyber Innovation Hub, says he’s now flooded with ideas and LinkedIn messages from defence-minded technologists.
“We get 20–30 LinkedIn requests per day. Back in 2020, we barely got three per week,” he said.
Germany’s Defence Ministry also acknowledges the strategic role of startups. Annette Lehnigk-Emden, who heads its procurement agency, stated that AI and drones are as revolutionary as tanks and airplanes once were.
Catching Up to the U.S.
Germany and Europe still trail the U.S. in many areas—especially in space, precision munitions, and jet aircraft. The U.S. began backing defence startups in 2015, with companies like Palantir, Anduril, and Shield AI winning Pentagon contracts early on.
By contrast, European startups have only recently begun receiving state support. But things are turning around. Aviation Week reported that Europe’s top 19 defence spenders (including Ukraine and Turkey) will invest $180.1 billion this year—compared to $175.6 billion for U.S. procurement.
From Defence to Economic Growth
Germany’s $4.75 trillion economy has been struggling, hit by high energy prices and global competition. Many experts now argue that investing in defence innovation could spark wider economic growth.
“Defence innovation has always driven civilian progress—think GPS, the internet, or jet engines,” said Markus Federle of Tholus Capital. “A strong defence base means a strong economy and innovation on steroids.”
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