Coming soon: Meet the people behind the companies you invest in
DealPotential
With rising global instability, the rising demand for defense tech opportunities in 2025 is being driven by innovation in national security. The intersection of national security and technological innovation is fueling the rapid growth of dual-use technologies (NATO – Emerging and Disruptive Technologies), creating a wealth of opportunities in sectors ranging from AI and cybersecurity to biotech and space tech.
Here’s a breakdown of how the defense tech sector is evolving, and what it means for investors looking to capitalize on these opportunities.
Governments around the world are significantly increasing their spending on R&D to support national security needs (SIPRI Military Expenditure Database). The focus is on technologies with dual-use potential, such as:
This surge in government-backed R&D opens up substantial opportunities for private market investors to back innovative startups developing technologies that will serve both defense and civilian applications. Public-private partnerships are also becoming more common, offering a way for investors to secure returns while contributing to the advancement of national security tech.
The defense tech sector is heavily regulated, and the growing importance of dual-use technologies means stricter controls on export and use. This regulatory landscape can present both challenges and opportunities for investors:
For investors, understanding and navigating these regulatory hurdles will be critical. Firms with strong legal frameworks and experience working with government contracts will have an edge.
With critical infrastructure becoming a major target for cyberattacks, cybersecurity has become a key priority within the defense tech space. As nations enhance their digital security frameworks, the need for technologies that safeguard critical systems, protect data, and prevent espionage will continue to grow. Key investment areas include:
Investors focusing on companies that specialize in these technologies will be well-positioned to tap into the growing defense spending in the cybersecurity sector.
Geopolitical uncertainty has highlighted the fragility of global supply chains, leading to a push for localized production and increased resilience. In this context, defense tech plays a crucial role in ensuring the continuity of essential industries. Technologies such as:
are gaining traction. Investors should look for opportunities in companies that provide innovative solutions to strengthen supply chains for both military and civilian use.
Several emerging technologies are driving the future of defense, with applications that extend far beyond military needs. Notable sectors include:
As these sectors evolve, they present unique investment opportunities for private market investors who are prepared to support cutting-edge companies in their growth.
Dual-use technologies come with ethical dilemmas, particularly when it comes to surveillance, privacy, and military applications. As the defense tech sector grows, investors must take an active role in ensuring that their investments align with ethical standards and public expectations.
Transparency and responsible innovation will be key factors in maintaining public trust and mitigating potential backlash. Investors who prioritize companies with strong ESG frameworks will be better positioned to succeed in this space.
Defense tech investing is becoming a strategic priority for private equity and institutional investors in 2025. Driven by geopolitical instability, increasing government investments, and the rapid development of dual-use technologies. For private market investors, this presents an exciting opportunity to back companies that are not only at the forefront of technological innovation but are also shaping the future of national security.
By staying informed on regulatory changes, ethical considerations, and emerging trends in defense tech, investors can position themselves for long-term success in this evolving and high-stakes sector.
Book a free demo with DealPotential and get real-time insights on the next billion-dollar opportunities.
SHARE:
We’re launching People Data: a new feature that gives investors direct access to executive insights across private companies.
Q2 2025 M&A trends show fewer deals but higher value. Learn how private market investors are navigating this shift with DealPotential.
Explore 5 top predictive investment signals private investors rely on in 2025 to identify deals earlier & make smarter investment decisions.
The only data aggregator built for private markets. Our advanced AI turns private company data into actionable insights.
Norra Slottsgatan 3
SE-803 20 Gävle, Sweden
