After 2022, Europe’s defense and dual-use acceleration began. Ukrainian teams were pulled directly into combat reality, forced to innovate in real time. At the same moment, Europe’s defense market received a reminder that security assumptions built for peacetime do not survive contact with war. This shift was reinforced in 2025, when the Munich Security Conference marked the point at which American security guarantees were no longer treated as immutable.
Defense expenditure among Europe’s NATO states surged, pushing aggregate spending toward the €380–400 billion range. Procurement budgets grew even faster, with more than twenty countries posting year-on-year increases. This environment created an opening for startups. In Central and Eastern Europe, they moved early. More than 100 defense and dual-use startups have emerged across the region. Since early 2022, European defense-tech startups have raised roughly €2.4 billion.
It would be easy to read this as a boom story. Capital is flowing, budgets are rising, startups are multiplying. Headlines and political spin encouraged that interpretation. Yet what has not sufficiently changed is how Europe actually builds and buys defense technology. Declared ambitions continue to outpace what is delivered in practice.
For Central and Eastern European startups, the challenge is not whether demand exists. It is whether early-stage companies, forged in urgency and improvisation, can survive the transition to sustained capability. Around 90 percent remain at seed or Series A stages. The conditions that rewarded speed, creativity, and decentralization are giving way to a harsher test: professionalization, integration, and scale. For Ukrainian-born companies in particular, this transition is structurally difficult. There is no deep domestic market capable of absorbing production at scale, making internationalization a necessity. That exposes young firms to procurement regimes, compliance expectations, and risk assessments designed for incumbents.
Scarcity also produced inefficiencies. The ecosystem generated a zoo of capabilities (drones, sensors, electronic warfare countermeasures, software platforms) often brilliant in isolation, rarely designed to scale together. By 2025, only a fraction of FPV drones reached targets, not because the concept failed, but because electronic warfare evolved faster than fragmented engineering efforts could adapt.
The broader lesson extends beyond Ukraine. Innovation density does not equal industrial capacity. What follows from this is not a call to replicate the Russian top-down, centralized model. It is a warning that a window that allows speed, improvisation, and parallel experimentation is closing. What comes next will reward those who can translate pressure-tested insight into systems that remain intelligible, improvable, and scalable.
For teams shaped by Ukraine’s war, the advantage was their closeness to operational reality. That advantage weakens when decisions stop being constrained by use under pressure. Ukrainian-born startups must now pursue multiple markets and pathways at once. The practical issue is whether that expansion remains anchored in what actually worked under stress, or whether those lessons stay implicit and are gradually overridden by external expectations.
This matters beyond Ukraine. Many European defense and dual-use startups have yet to encounter comparable constraints. The next phase will separate companies that build with real limits in mind from those that discover them later, when changing course is far more expensive.
Ostap Vykhopen is the co-founder and CTO at Mantis Analytics. He has over 20 years of experience in technology leadership, specializing in AI and Big Data platforms for mission-critical operations.
