2023 UK Defence Tech Report

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Beauhurst UK Defence Technology Report

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MD One Ventures is glad to have partnered with Beauhurst to identify and share some objective insights into the national security innovation landscape across the UK. In this age of material geopolitical and market uncertainty, there has understandably been an increased level of sector interest from a range of stakeholders.

Whilst within all early-stage ecosystems there is natural information inefficiency, we have drawn data from a range of sources to objectively map relevant global, European and UK domestic trends.

We see defence tech in broad terms: we focus both on technologies in the traditionally defined defence and aerospace sectors, as well as the security sector more broadly, which covers corporate and personal security. Specialist sectors such as cyber security, critical national infrastructure, gaming, DeFi and fintech, quantum computing and space all have enormous roles to play in supporting our societal security systems.

Pitchbook and the Financial Times recently published data showing that global deal activity from PE and VC investors had increased by 2022 to $20bn, up from an annual average between 2015-2019 of $10.4bn.

Given the US’s prominence within the aerospace and defence sector, it is no surprise that the same
data saw Europe only contributing around a tenth of this figure. There are, however, various initiatives to promote defence tech in Europe (including both the EU and the UK)—including the new $1bn NATO Defence Innovation Fund.

The historic consistency of national defence and public spending is a unique factor to this sector, relative to other technology sectors, which should be noted. Whereas in a range of other verticals in both equity and debt markets we have seen, and continue to see material volatility, an anomalous stabiliser
in this sector is the remarkable consistency of defence spending as a percentage of GDP for the last 20 years. For the same period, World Bank data shows us percentages broadly between 2-2.5% for NATO and EU Countries.

We are excited by the opportunity that this sector presents to founders and investors and are glad that the data in this report tells the story of the past few years’ growth in momentum. We look forward to sharing follow-up studies that will focus on some of the more thematic trends within the sector.

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