Venture Capital

The UK and Germany are emerging as the core of Europe’s AI‑driven defence‑tech boom. Private capital has jumped to $4.3 bn since 2022, backed by NATO’s 5 % GDP defence‑spending pledge and national policies such as the UK’s £5 bn tech‑investment package and Germany’s €100 bn budget from 2026. Start‑ups like Helsing, Quantum Systems, PhysicsX, Cambridge Aerospace, Tekever and Stark have secured multi‑hundred‑million‑euro rounds and major contracts with the RAF, German army and NATO allies. Strong talent pools, manufacturing bases and AUKUS links aid scaling, but slow procurement, export‑control hurdles and a shortage of security‑cleared engineers remain key obstacles.

House Democrats are launching the Democratic Commission on AI and the Innovation Economy to lead federal policy on artificial intelligence as firms ramp up lobbying and a $100 million AI‑backed super‑PAC targets the 2026 midterms. Led by Reps. Ted Lieu, Josh Gottheimer and Valerie Foushee, the commission will convene industry, stakeholders and committees to craft a unified legislative agenda, address state‑level regulatory conflicts, and focus on a federal risk‑assessment framework, data‑sharing sandbox, and secure AI‑hardware supply chains. The effort aims to provide clearer oversight, boost venture funding and protect national security.

Tiger Global announced its new venture‑capital fund, Private Investment Partners 17, targeting $2.2 billion—mirroring the strategy of PIP 16, which holds OpenAI and Waymo and is up 33% YTD. The smaller raise signals a move from its earlier “spray‑and‑pray” approach to a more disciplined, fundamentals‑focused model. The firm plans to prune underperformers, redeploy $1 billion of exit proceeds, and double down on winners such as Revolut, ByteDance, and AI/autonomous‑driving firms, while warning of inflated AI valuations.

Japanese investment in European tech startups is surging, driven by confidence in Europe’s mature ecosystem and a strategic shift away from Silicon Valley. Since 2019, investments have exceeded 33 billion euros, a significant increase compared to the preceding years. Japanese corporations are particularly interested in deep tech ventures, providing capital and expertise in manufacturing and supply chains. While challenges like language barriers exist, the trend reflects a broader geopolitical strategy and the appeal of European entrepreneurs with experience in multinational corporations.

Deal-making among ultra-high-net-worth family offices slowed significantly in 2025, with direct investments down 63% year-over-year in October. Despite the downturn, AI remains a key focus, attracting substantial capital. Notable deals include Winklevoss Capital’s investment in Crusoe and Hillspire’s investment in Reflection. Family offices also participated in fusion energy funding rounds. While deal volume decreased, overall ticket size remains substantial, driven by AI’s surging valuations and a shift towards larger, mature deals, as family offices seek greater returns and build in-house expertise.

Venture capitalist Oren Zeev’s early “relationship investment” of $50,000 in a nascent startup led to StreamOnce, later acquired by Jive Software. This initial bet paved the way for Navan (formerly TripActions), a business travel platform poised for an IPO valuing it at over $6 billion, potentially yielding Zeev over $1 billion. Zeev’s success stems from a gut-feeling investment approach. He operates as a solo GP, making quick decisions and valuing founder relationships. His strategy, including reinvesting management fees, aligns him with LPs.

Govini, an AI-driven defense tech startup, has surpassed $100 million in ARR, fueled by demand for innovative solutions in the defense industry. Backed by a $150 million investment from Bain Capital, Govini aims to expand its team and product suite, addressing escalating security demands. CEO Tara Murphy Dougherty emphasizes data-driven insights for optimized resource allocation, highlighting their AI-powered Ark software for modernizing the defense tech supply chain. Govini competes with both legacy defense giants and emerging disruptors amid rising global tensions.

Thoma Bravo’s Orlando Bravo warns of an AI valuation bubble, drawing parallels to the dot-com era. He questions high valuations relative to current revenue, citing examples like OpenAI and Palantir. While acknowledging AI’s potential, Bravo emphasizes realistic cash flow projections. He notes the presence of established companies with strong balance sheets differentiates this era from the dot-com bubble, but their strategic investments may create market distortions. He advises investors to exercise caution and due diligence.

While the US dominates AI funding, Europe sees potential in practical AI applications. European startups face challenges including conservative investors and market fragmentation but have advantages in talent acquisition. Companies like Mistral, Synthesia, and ElevenLabs (an AI voice generation startup) are building specialized AI solutions, some developing their own LLMs. The key to success lies in rapid iteration, securing capital, and fostering a more ambitious mindset among European entrepreneurs. Building independent AI infrastructure is also crucial.

Silicon Valley’s defense tech sector is booming, attracting billions in venture capital and challenging traditional defense contractors. Startups, dubbed “neoprimes,” like Anduril Industries, are disrupting the industry with agile, software-first approaches and dual-use technologies. Venture funding has surged, driven by the need for advanced technologies in areas like hypersonics, AI, and cybersecurity to address great power competition. Investment syndicate MilVet Angels highlights the importance of combining technological expertise with military insight to create deterrents and maintain stability.