Geopolitical instability is everywhere and Europe, too, is beginning to recognize and respond to these shifts. Approximately a month ago, European Commission President Ursula von der Leyen proposed the “ReArm Europe Plan”, now referred to as “Readiness 2030”, aiming to mobilize up to €800 billion to enhance the European Union’s defense capabilities. Basically, it became crucial to streamline more resources for security — a matter that has become prevalent in recent months.

As reported today, EU finance ministers will discuss creating a joint defense fund this week to purchase and manage defense equipment, with member states paying a fee for its use. The proposal, commissioned by Poland, aims to raise defense funding without increasing national debt, a concern for high-debt countries.

In our neck of the wood, CEE nations are ramping up defense spending and modernizing military forces. Militarization is also a key priority at the national level. Romania’s Supreme Defence Council approved plans to acquire new small warships to strengthen its naval presence in the Black Sea and bolster NATO’s eastern flank.

The Polish government has allocated $750 million to the Polish Armaments Group (PGZ) to increase ammunition production, in response to heightened demand due to the conflict in Ukraine. 

Undoubtedly, there will be more initiatives like this, as startups and governments are urged to invest in technologies that are transforming modern warfare. To shed more light on the topic, The Recursive has collected key trends relevant to the defense sector in CEE.

Surge in defense tech investments

According to Dealroom.co and the NATO Innovation Fund inaugural report, ?in 2024, European defense startups achieved a record $5.2 billion in venture capital funding, marking a 30% increase over the past two years. Overall, investing is up nearly 5x in the last six years. 

Notably, the NATO Innovation Fund, a €1 billion venture capital initiative backed by 24 NATO allies, has been actively investing in deep tech startups.