Neros Technologies just got $250 million. Castelion got over $1 billion. Valar Atomics got $1 billion too, for nuclear tech. Big names wrote these checks. Sequoia. Thiel Capital. Carlyle. JPMorgan. a16z. These are the same firms that loved AI chatbots. Now they love defense tech even more.
This was the biggest quarter defense tech has ever had. VCs poured $19.8 billion into the sector in just three months. That beats a third of all of 2025. And 2025 took a full year. This took 90 days. By midyear, the total hit $35.6 billion. That’s 40% more than last year.
Is this about war? Not really. It’s about budgets. Here’s why. Defense spending does not follow the economy. In 2008, the economy crashed. Startup funding fell by half. Defense budgets barely moved. That’s the real draw for investors. This money keeps flowing. Boom or bust.
And that budget trend won’t fade fast. Defense spending in Europe could triple in six years. Germany alone plans to spend 3.5% of its GDP on defense. Why? Not fear of war. It’s about trust. Countries don’t want to depend on others for defense tech. That kind of decision takes years to reverse.
But here’s the catch: most of the money goes to a few names. Anduril alone took about half of all U.S. defense tech dollars this year. Its value just hit $61 billion. That’s double what it was before. Shield AI raised $1.5 billion, now worth $12.7 billion. Saronic raised $1.75 billion, now worth $9.25 billion. A small group of firms is eating most of the pie.
Even insiders are getting nervous. Anduril’s own co-founder gave a warning. He said too much money is chasing too few good deals. That pushes prices too high. Here’s the math. Defense firms usually sell for 4 to 6 times their revenue.
Hot AI firms sell for 15 to 20 times. That’s a big gap. It makes today’s high prices hard to defend.
