Europe’s defence innovation layer is shifting from boutique prototypes to production intent. Over the last 12 months a pattern has emerged: high-growth startups with deep AI expertise are no longer peripheral innovators. They are forming operational partnerships with defence primes and moving into government-funded accelerator pipelines. The result is an ecosystem in which capital, procurement and operational needs are converging to field AI-capable capabilities at scale.
The clearest case study is the rise of Helsing. The Berlin-based AI firm closed a headline Series C in July 2024 and immediately translated financing into partner-led integration work and regional expansion. Beyond the funding round itself, Helsing announced cooperation with major platform integrators to supply AI mission software for manned-unmanned teaming concepts. That kind of pathway is now a template: capital to accelerate R&D, strategic partnerships to reach system-of-systems integration, and regional commitments to address political demands for sovereignty.
Primes are no longer treating startups as optional skunkworks. Airbus and Helsing signed a framework agreement to co-develop AI tooling for a “Wingman” concept intended to operate alongside current combat aircraft. The partnership shows how primes are outsourcing software innovation to specialised firms while retaining systems integration responsibility. For startups this reduces the barriers to real operational testing, but it also forces them to adopt defence-grade engineering practices faster than a consumer SaaS timeline would normally require.
Concurrently, institutional capital is moving into defence-grade deep tech. NATO’s Innovation Fund began deploying its initial tranche into European deep tech companies focused on semiconductors, robotics and materials. The fund is explicitly targeting technologies that accelerate AI and autonomy on the battlefield. These investments create cross-border signalling: they lower market risk for startups building defence-relevant AI, while tethering those startups to alliance requirements and security vetting. That tethering both expands market access and raises compliance burdens.
From an engineering perspective there are three operational challenges that collaboration between EU startups and larger actors must solve.
1) Data and compute sovereignty. High-performance AI needs secure pipelines and dedicated inference and training environments. European projects and the EDF have explicitly funded infrastructure for secure AI processing and battlefield data fusion. Without European control of data flows and compute stacks, startups risk being excluded from classified integration work. That creates demand for sovereign AI stacks, on-premise model hosting and auditable toolchains.
2) Interoperability and interfaces. Startups typically design point solutions for perception, planning or optimization. Integrating these modules into multi-domain command and control requires standardized APIs, timing guarantees and safety envelopes. The Airbus-Helsing work on a Wingman system illustrates the extra effort required to map an AI agent’s outputs to safety-critical flight controls and rules of engagement interfaces. Software contracts that look simple in demo settings quickly balloon when certifying for military operations.
3) Verification and governance. The regulatory and ethical overlay is thick. EU and NATO funding instruments are deliberately pushing dual-use technologies through accelerator programs that include testing and ethical assessments. Startups that want to scale into defence markets must adopt reproducible verification, adversarial testing, and human-in-the-loop architectures that satisfy both technical validators and political stakeholders. Programs such as DIANA are explicitly designed to bridge early stage innovation to defence requirements by providing testing, mentoring and small scale funding.
What does this combination of private capital, prime-startup teaming and institutional accelerator support mean strategically? First, Europe is assembling a on-ramp for rapid software-driven upgrades of existing platforms. If done correctly, this lowers the marginal cost of capability upgrades compared with full platform replacement. Second, the ecosystem is bifurcating along a sovereignty axis. Startups that can deliver auditable, export-controllable AI stacks and local hosting options will win defence contracts. Third, the operational tempo will be dictated less by hardware constraints and more by standards, testbeds and procurement cycles. Those cycles are shortening, but not as fast as venture timetables.
Policy makers and defence planners should consider three immediate interventions.
1) Fund shared testbeds and common data fabrics. A small portfolio of accredited European test environments with secure compute and common telemetry standards would allow startups to demonstrate capabilities under uniform conditions and reduce integration risk for primes.
2) Create accelerated certification lanes for software modules. Formalize a “safety and assurance” pathway for AI modules so that once a module passes a defined battery of tests it can be reused across programs without repeating full-stack certification each time.
3) Tie investment incentives to responsible design. Public funding and alliance capital should require transparent documentation of training data provenance, adversarial robustness metrics and human oversight models. This keeps the ethical debate rooted in engineering practice rather than rhetoric.
Startups are providing the agility and algorithmic expertise. Primes bring systems know-how and procurement muscle. Public funds provide capital and a political framework that demands sovereignty. The structural question for Europe is whether these pieces can be turned into a durable industrial base for software-defined capability, or whether the current moment will merely accelerate a handful of winners who then export the IP and talent elsewhere. The answer will come down to the operationalization of standards, the availability of secure compute, and the willingness of governments to align procurement incentives with a long term industrial policy rather than one-off buys.