Private equity pours billions into defense tech as investors debate a bubble
Private equity growth investments in defense reached $4 billion in the first nine months of 2026, up from $500 million in 2024.
Key points
- Private equity growth investment in defense reached $4 billion in the first nine months of 2026, up from $500 million in 2024.
- Defense startups across NATO and allied countries raised $27.1 billion through September, nearly double all of 2025.
- Some investors warn of inflated valuations, while others say growing military budgets support long-term bets.
Private equity firms are putting billions into defense technology as rising military spending and geopolitical tensions drive an investment boom. PitchBook data shows private equity growth investments in defense reached $4 billion in the first nine months of 2026, compared with $500 million in 2024.
Defense startups across NATO and allied countries raised $27.1 billion through September, nearly double the total for all of 2025, according to an October report from Dealroom and Resilience Media. Analysts say private equity and other financing are expected to grow more important as companies move from innovation to industrial-scale production.
Deal activity and investor interest
Defense private equity growth deals rose from 15 in 2024 to 31 in 2025 and 48 through September 2026, PitchBook data shows. Those investments made up 41% of defense private equity deal value in 2026, up from 3% in 2024.
A White & Case survey of 250 senior decision-makers at U.K. defense companies found 97% expected their businesses to seek significant external funding over the next 12 months. Advent International committed up to $1 billion to next-generation defense technology in March, and managing partner Shonnel Malani said roughly three-quarters has already been deployed.
Private capital is now playing a critical role in the financing of defence technology companies
— Daniel Turgel, partner at White & Case
Valuation concerns and exits
Malani said defense technology companies are increasingly valued on technological promise rather than revenue or profit. Asked whether an investment bubble could emerge, he said there is a very big risk and described "a lot of froth in the system," adding Advent had walked away from deals over "silly" valuations.
PitchBook's Jim Corridore disputed that the sector is overheated but expects interest to keep growing. PitchBook counts 504 defense private equity deals but just 101 exits since 2021, and IPOs accounted for 70% of exit value through September 2026.
