The Capital Sovereignty Problem in European Defence-Tech

European defence-tech has crossed a structural threshold. The sector that European venture investors would not touch before 2020 is now, on the most cited industry measure, the fastest-growing vertical in European venture capital, with a record 8.7 billion dollars raised in 2025 according to Dealroom and the NATO Innovation Fund.

Yet the same source attributes the surge primarily to late-stage mega-rounds, and a parallel industry estimate places United States investors at 40 to 50 per cent of the capital flowing into the sector, concentrated in precisely those larger growth cheques.

This analysis answers: Why has European defence-tech become the fastest-growing venture-capital vertical, reaching 8.7 billion dollars in 2025? How does the concentration of the surge in late-stage mega-rounds shape the sector's capital structure? What does the estimated 40-50 percent share of US investors imply for European capital sovereignty? What dependencies and policy responses follow from reliance on foreign growth-stage capital?