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  • 22 April 2025: Europe's defence tech sector is undergoing a rapid, needed transformation; EU banks on AI Factories, and more

22 April 2025: Europe's defence tech sector is undergoing a rapid, needed transformation; EU banks on AI Factories, and more

Author

Robin Wauters
April 22, 2025

Welcome to the bi-weekly “Inside European Deep Tech” newsletter, compiled by Robin Wauters, founder of boutique communications agency Profoundo, board member of the European Startup Network, and formerly founding editor and CEO of Tech.eu.

(BTW I also just announced I've joined EWOR as a Venture Scout).

There are now 66,620+ subscribers of this newsletter, and I invite each and every one of you to provide feedback so I can upgrade it. 💪🏻

Periodic reminder that I'm always up for a chat about how to upscale your communication and media strategy, so do hit me up if you want to have a conversation.

Before we get to the content:

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Now, let’s get to it for newsletter issue #7; there's a lot to cover.

All eyes on Europe's defence tech industry

As you can tell by many of the links below, Europe’s defence tech industry is undergoing rapid transformation, driven by record investments, a push for technological sovereignty, and the urgent need to modernise in response to geopolitical threats.

The European Defence Fund (EDF) 2025 Work Programme allocates over €1 billion to collaborative R&D, targeting next-generation technologies in areas like AI, cybersecurity, advanced sensors, and autonomous systems.

Key trends include:

  • Focus on Innovation: Major funding is directed to cutting-edge fields such as unmanned vehicles, bio- and nanotechnology, advanced propulsion, and energy resilience, with a strong emphasis on integrating AI and digital technologies into defence systems.

  • Support for SMEs and Startups: Special measures aim to bring non-traditional players into the defence ecosystem, fostering innovation and reducing reliance on foreign tech.

  • Strategic Autonomy: The EU is prioritising industrial independence, interoperability, and reduced fragmentation, aiming to build a robust European Defence Technological and Industrial Base. Easy, that won't be.

  • Sustainability: For the first time, environmental considerations and energy efficiency are integral to defence capability development.

  • Collaboration and Integration: Increased cooperation among member states - and even with Ukraine - seeks to streamline joint procurement, share costs, and avoid duplication.

In summary, Europe’s defence tech sector is shifting from fragmented, incremental progress to a more coordinated, innovation-driven approach, with the ambition to become globally competitive and strategically autonomous in a fast-evolving security landscape.

It's really the one to watch in the coming years.

AI Factories

The EU said it would focus on building AI data and computing infrastructure and making it easier for companies to comply with regulation in a bid to catch up with the US and China in the artificial intelligence race.

It's Europe’s ambitious plan to boost its AI capabilities by providing shared supercomputing resources and expertise to startups, researchers, and industry. It aims to foster innovation while embedding ethical and trustworthy AI standards, reflecting the EU’s regulatory approach. The project’s success depends on effective coordination, attracting talent, and securing private investment.

If executed well, it could help Europe compete globally in AI—but it faces big challenges in turning vision into real-world impact.

Must-reads

Insights: data, research, interviews and profiles

Opinions worth reading

Selected news items

  • Investindustrial has raised €4 billion for its latest flagship mid-market private equity fund, surpassing its initial target

  • Quantum Systems, a manufacturer of surveillance drones co-financed by Peter Thiel, is looking to raise at least €100 million (and up to €300 million) in a new financing round that would value the company at more than €1 billion euros

  • EIF is joining AVP as an anchor investor alongside AXA for its €1.5 billion growth fund, as part of the European Tech Champions Initiative (ETCI)

  • Early-stage VC Revent closes €100m to back European climate, health and ‘empowerment’ startups

  • Anthropic is launching a major European hiring push as an AI talent crunch hits the region, with startups increasingly competing with homegrown competitors and big tech rivals for a limited pool of expert workers.

  • Amsterdam-based Carbon Equity, a climate venture capital and private equity investment platform, announced the final closing of €105M for its Climate Tech Portfolio Fund III from 460 investors

  • The Dutch government released an ambitious vision to position the Netherlands as a global biotech leader by 2040

Upcoming events in Europe for your calendar

The scrolled-all-the-way-down extras

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