For the innovation ecosystem, supporting defence tech startups is no longer optional

With the announcement of a new Defence Innovation Unit earlier this week week, the government has called on defence firms of all sizes – including startups – to help get cutting-edge technology into the hands of British troops. This comes as transatlantic tensions over the Ukraine war have reached a boiling point, alongside growing concern that the UK’s expensive and slow-moving defence procurement model leaves it unprepared for future conflicts.

The innovation ecosystem should step up to meet the challenge. Startups working on defence tech face particularly fearsome barriers due to high R&D costs and the challenge of working with a very small number of potential customers, first among them the Ministry of Defence. If Sir Keir Starmer’s government is committed to driving the adoption of new defence tech, then startup support organisations like Capital Enterprise, as well as funding agencies, regional government, universities, incubators and accelerators, will have a critical role to play in supporting the UK’s defence tech ecosystem as it scales up.??

One of the biggest challenges for defence tech startups is demonstrating credibility to secure government contracts. Unlike commercial tech, where companies can scale rapidly through private sector adoption, defence startups often face procurement cycles longer than the lifetime of the average B2B SaaS company. By speeding up the decision-making cycles for trials of new tech, the government can give startups the signal they need to secure investment, while innovation supporters should work with them to ensure they are investable.?

As Sifted reported earlier this year, Europe’s biggest defence tech startup, Helsing, has signaled a shift away from software-only solutions by developing its own drones. This news highlights a broader challenge: while software plays a crucial role in modern defence capabilities, enabling intelligence gathering, cybersecurity, and automation, the hardware requirements of modern conflict are vast beyond anything in our living memory. According to the Kyiv Independent, Ukraine will produce more than 4 million drones this year. The vast majority of injuries in that conflict – more than 80% according to some sources – are now drone-inflicted. It is possible to imagine a future where a country without its own domestic drone supply chain would be as vulnerable as one without steelmaking or shipyards.

For the UK, building domestic capability in defence tech is not just an economic opportunity but a matter of national security. Over-reliance on foreign supply chains introduces strategic vulnerabilities, as we discovered during the pandemic and seem fated to learn again. The UK has no shortage of startups working in defence tech, some of which have already secured government contracts here as well as in the USA. Everyone working in this space has been fighting an uphill battle to date: against hostile investors, slow-moving procurement processes, and an innovation ecosystem which views the sector as outside of scope. With the government flagging this is a matter of urgency, it’s time we change that.