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 </p><p><span><span>Despite the sharp increase in European defense spending since Russia's invasion of Ukraine, most funding continues to flow to legacy defense giants rather than the startups developing the next generation of military technologies. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>According </span></span><a href=”https://www.bruegel.org/policy-brief/reforming-european-defence-procurement-boost-military-innovation-and-startups”><span><span><span><span>to an analysis</span></span></span></span></a><span><span> by the Brussels-based economic think tank Bruegel, between 67% and 90% of military procurement in Poland, the United Kingdom and Germany still go to the top ten global defense manufacturers. By contrast, only 36% goes to the top ten in the more innovation-driven U.S. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p>Analysts and investors warn that unless governments do more to support smaller firms, Europe could miss out on the technologies shaping the future battlefield — from drones and robotics to electronic warfare. The risk is especially acute on a continent already struggling to invest enough in R&;D across sectors.</p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>The rearmament boom’s </span></span><span><span>tough procurement questions are inevitably fueling tensions between traditional arms manufacturers and emerging startups competing for a share of Europe's expanding defense industrial base. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Germany — which aims to become Europe's leading military power — illustrates the challenge. Last year, German military equipment spending rose to </span></span><a href=”https://www.kielinstitut.de/publications/news/big-spending-little-future-germany-is-rearming-differently-from-poland-and-the-uk/”><span><span><span><span>€85 billion</span></span></span></span></a><span><span>, but the share of contracts awarded to innovative technologies has fallen by more than half since 2020. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>“It is very striking to see that there’s no increase in spending on the new stuff over the last six years in Germany,†said Guntram Wolff, a senior fellow at Bruegel specializing in defense markets. “I understand that we have to replenish stocks [with legacy companies], but not to invest in anything new is a big strategic mistake.â€Â </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

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</p><h2><strong><span>The EU’s procurement</span></strong><span><span> </span></span><strong><span>question</span></strong></h2><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Since Russia's full-scale invasion of Ukraine in February 2022, more than 230 defense tech startups have been founded across Europe. Some have secured contracts directly with national governments, but there is still no structured framework for cooperation between legacy defense firms and newer players in the sector. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>“Competition between primes and smaller actors matters, but the key issue in Europe is that cooperation and procurement routes for smaller innovative companies are not yet systematic enough,†said Enzo Terrier, a tech investor at Move Capital, a growth equity fund that has invested in European defense tech startups including ICEYE and Shark Robotics. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>For Portugal's Tekever, one of Europe's few unicorns specializing in AI-driven autonomy solutions, the disruption caused by innovative newcomers is a reflection of how the market is evolving. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>“We just need to acknowledge that there are new needs that need to be addressed,†Pedro Petiz, Tekever's director of strategic development, told </span><em>The Parliament</em></span><span><span> in an interview in the Portuguese coastal city of Estoril. “What I expect to see is an increasing cooperation between hard power and software-driven solutions.â€Â </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>But making that new defense ecosystem work will require greater efforts to integrate innovation and cutting-edge technologies from smaller firms into Europe's procurement processes. “If you go through a traditional process, it is a nightmare,†Petiz said. He cited current systems that are designed for companies with longer production cycles and place less emphasis on speed, agility and iterative development. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>“That’s the trade-off we need to take into account, which is the speed of technology versus a minimum fair process that you need to come to, but which must be manageable.â€Â </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Terrier agreed, saying Europe's bureaucracy-heavy procurement systems and national fragmentation make it difficult for smaller startups to compete. “There is a path, but it remains difficult to navigate: procurement cycles are long… [and] requirements are not always aligned with startup development cycles.â€</span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>With Europe generally less willing to take risks than the U.S., public support and investment play an even greater role in helping startups grow. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>The European Commission has proposed several initiatives aimed at supporting the sector, including a </span></span><a href=”https://ec.europa.eu/commission/presscorner/detail/en/ip_26_687″><span><span><span><span>€115 million program</span></span></span></span></a><span><span> for agile and rapid defense innovation and cooperation frameworks with Ukraine's defense industry. But the EU's room for maneuver remains limited, leaving national governments responsible for driving meaningful reform. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Wolff argued that procurement reform should become a central pillar of Europe's broader defense reorientation. He said </span></span><a href=”https://www.bruegel.org/policy-brief/reforming-european-defence-procurement-boost-military-innovation-and-startups”><span><span><span><span>measures</span></span></span></span></a><span><span> such as involving innovative firms earlier in the acquisition process or encouraging multiple companies to collaborate on new technologies could prove transformative. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>A clearer path toward procurement contracts could also help address one of Europe's longstanding barriers to </span></span><a href=”https://www.theparliamentmagazine.eu/news/article/can-europe-deliver-more-unicorns”><span><span><span><span>scaling startups</span></span></span></span></a><span><span>: access to capital.  </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>“If you have that and if you can show that you are on the pipeline to get orders in, then you can go to the capital markets and actually raise funding relatively easily,†Wolff said. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><h2><strong><span>Ukraine's drone lessons</span></strong><span><span>Â </span></span></h2><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Across the West, countries are pursuing different strategies for modernizing their military procurement ecosystems and resolving the tension between large legacy “primes†and smaller innovative startups. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Ukraine's success in quickly outfitting its army with new drone technology has drawn the attention of military planners throughout Europe and beyond. A key part of their strategy is a </span></span><a href=”https://digitalstate.gov.ua/news/tech/brave1-market-ukrayina-zapuskaye-marketpleys-viyskovykh-innovatsiy”><span><span><span><span>digital procurement platform</span></span></span></span></a><span><span> called Brave1, which has also been </span></span><a href=”https://cepa.org/article/pick-and-mix-ukraine-opens-an-amazon-for-weaponry/”><span><span><span><span>dubbed an “Amazonâ€</span></span></span></span></a><span><span> for weapons. Typically, procurement for innovative technologies such as drones, ground robotics, AI-powered tools and electronic warfare tools comes from the central government; but individual Ukrainian brigades and battalions across the army are able to order directly on the Brave platform. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Legacy weapons such as artillery, ammunition, armored vehicles and missiles still are channeled though the central government. The Brave1 system reflects the rapidly changing conditions on the battlefield in Ukraine, where technologies can become obsolete in a matter of months. It's also helped Ukrainian arms producers become some of the most innovative in the world. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>However, trying to replicate the Ukrainian innovation model in Germany and the rest of Europe could backfire, according to Emil Archambault, a fellow at the German Council for Foreign Relations. In Ukraine, units only kilometers apart can have completely different weapons systems. As Germany and Europe scales its defense industry within NATO, he said it's important to have innovative but standardized equipment. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>“The decentralized approach, which is key in terms of Ukraine, is not something that we can copy directly,†Tomasz Husak, </span></span><a href=”https://www.theparliamentmagazine.eu/news/article/how-ukraines-untapped-potential-could-bolster-europes-security”><span><span><span><span>director for defense policy</span></span></span></span></a><span><span> at the Commission, said at an event organized by Friends for Europe in March. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><h2><strong><span>Germany's dilemma, America's model</span></strong><span><span>Â </span></span></h2><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Germany is trying to create an innovation ecosystem too, according to Archambault, but at a scale and a level of uniformity not seen in Ukraine. The country is in the midst of </span></span><a href=”https://www.hartpunkt.de/bundeswehr-beschaffungsamt-baainbw-erhaelt-matrix-organisation-flexiblere-beschaffungsprozesse-und-neue-standorte/”><span><span><span><span>major reforms</span></span></span></span></a><span><span> of its procurement process to make it easier for startups to access contracts. In recent years, it has launched innovation-oriented hubs for startups such as the government-backed venture fund </span></span><a href=”https://www.sprind.org/en/actions/projects”><span><span><span><span>SPRIND-D</span></span></span></span></a><span><span> and the German army's </span></span><a href=”https://www.cyberinnovationhub.de/en/”><span><span><span><span>Cyber Innovation Hub</span></span></span></span></a><span><span>. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Nevertheless, the vast majority of the country's defense spending is still going towards legacy companies, and the gap is still growing, according to a recent study by the Kiel Institute. Before the war in Ukraine began, Germany procured 21% of its arms from innovative suppliers. In 2025, the figure was only 9%. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

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</p><p><span><span>However, the relatively small amount spent on smaller companies can be misleading, according to Archambault, since Germany still needs to plug legacy capability gaps from decades of underinvestment in its military. Large, expensive systems such as fighter aircraft, Leopard tanks and the Taurus cruise missile are not the kind of products that tend to be developed by startups. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>In Germany, the tension between primes and startups are on full display in the race between Germany's legacy weapons manufacturer Rheinmetall and startups like Helsing and Stark. Rheinmetall, Germany's legacy weapons manufacturer, gobbled up nearly €</span></span><a href=”https://www.bruegel.org/policy-brief/reforming-european-defence-procurement-boost-military-innovation-and-startups”><span><span><span><span>13 billion in German contracts</span></span></span></span></a><span><span> last year alone, according to Bruegel. The company has set its sights on nearly all parts of </span></span><a href=”https://www.ft.com/content/a326b178-4389-40f7-9979-a1b878e94c3d?syn-25a6b1a6=1″><span><span><span><span>Germany's</span></span></span></span></a><span><span> vast increase in defense spending, even in innovative technologies like drones.  </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Stark and Helsing won a major German drone deal finalized in February, one of the few</span></span><a href=”https://www.ft.com/content/eea27ca8-75e4-4d8a-90e7-bbf98d90ece1?syn-25a6b1a6=1″><span><span><span><span> examples of Rheinmetall</span></span></span></span></a><span><span> losing out on a major contract. Rheinmetall was </span></span><a href=”https://www.rheinmetall.com/en/media/news-watch/news/2026/04/2026-04-22-rheinmetall-receives-major-contract-in-the-drone-sector”><span><span><span><span>later added</span></span></span></span></a><span><span> to the drone procurement. Rheinmetall has also taken flack in Germany for CEO Armin Papperger's recent comments </span></span><a href=”https://www.theatlantic.com/national-security/2026/04/ukraines-housewives-versus-rheinmetalls-ceo/686666/”><span><span><span><span>knocking “Ukrainian housewivesâ€</span></span></span></span></a><span><span> for being behind Ukraine's drone industry. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>“They don't necessarily see their role as being at the forefront of innovation,†said Archambault. “But they are happy to invest resources in new technologies where opportunities manifest themselves.â€</span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>The U.S. continues to be focused on increasing innovation within its procurement process. Already a much larger percentage of U.S. defense procurement goes to startups than in Europe, but the Pentagon wants to </span></span><a href=”https://www.wsj.com/business/defense-startups-get-boost-as-pentagon-looks-beyond-biggest-contractors-5be662f5″><span><span><span><span>make it even easier</span></span></span></span></a><span><span> for smaller firms to access contracts. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>A new U.S. procurement strategy released last fall explicitly identified support for startups as a key priority for the federal government, although Washington's success in integrating smaller firms into the defense sector dates back to reforms introduced in the 2010s. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>According to Wolff, those procurement reforms led to the creation of key enablers such as the Small Business Innovation Research program and the Defense Innovation Unit, which helped integrate companies like Anduril Industries into the U.S. defense ecosystem. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>“The U.S. had a deliberate effort to get these innovative firms from Silicon Valley into military defense procurement,†he added. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>

</p><p><span><span>Wolff concluded that for Europe to protect its interests and security, as well as play a strategic role in modern warfare, national governments should study the experiences of both the U.S. and Ukraine. </span></span><span><span>Then it's time to decide what reforms to their own procurement systems make the most sense. </span></span></p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>
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			 Paula Soler&#13;
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 </p><p>Read the most recent articles written by <b>Paula Soler and Peder Schaefer</b> – <a href=”/news/article/frances-nuclear-turn-to-europe-is-welcomed-but-questions-remain”>The EU welcomes France's nuclear turn, but questions remain</a> </p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>
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 </p><p class=”av-tagTitle”>Tags</p><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>
 
 </p><a href=”/news/tag.htm?filter=4183″>Defense procurement</a><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>
 
 </p><a href=”/news/tag.htm?filter=4184″>EU defense</a><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>
 
 </p><a href=”/news/tag.htm?filter=4185″>European defense industry</a><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>
 
 </p><a href=”/news/tag.htm?filter=4186″>Defense startups</a><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>
 
 </p><a href=”/news/tag.htm?filter=4187″>Defense innovation</a><p style=”display: inline;” class=”WPAuto_Base_Readability-styled”>
 
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