Venture capital funds have pumped $12.3 billion into defense technology startups since the beginning of 2026, nearly double the amount raised during the same period last year.
The conflicts in Ukraine and the Middle East have exposed the urgent demand for weapons systems that are cheaper and faster to build. This demand has turned military hardware into one of the most sought-after bets this year.
Venture capital funds will pump $12.3 billion into defense technology in 2026
According to the Financial Times, the figure already exceeds the $9.95 billion that the sector attracted throughout 2025. This indicates how quickly investors Appetite for autonomous, drones ships, and artificial intelligence has grown on the battlefield.
Capital is concentrated among a small group of active investors. according to PitchbookJingles , Graduate Projects , and Andreessen Horowitz ranks among The most prolific check book in the first quarter.
Daniel Rudnicki Schlumberger, head of the JPMorgan Security and Resilience Initiative for Europe, the Middle East and Asia, noted that the high valuations come at a time when funds are increasingly treating defense as a perpetual opportunity.
“We are witnessing the most significant change in the way wars have ever been fought,” Schlumberger said He said.
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Funding for cryptocurrency projects is moving in the other direction
Defensive rush stands in contrast to cryptocurrencies, where investment investing He has cooled down sharply. Galaxy Research found that venture capital firms deployed about $4 billion across 355 cryptocurrency deals in the first quarter.
This represents a 50% decrease in capital compared to the previous quarter, despite the number of deals falling by only 16%.
“The decline from the sharp rise in Q4 was primarily driven by a decline in very large later-stage financings. The number of deals completed fell well below the amount of capital invested, suggesting that smaller early stage and seed rounds continued to execute even as Q1 lacked the focus of Q4’s mega rounds,” books.
On an annual basis, the pace indicates nearly $16 billion in 2026, less than last year’s total of close to $20 billion. At the same time, the establishment of a new fund has also been halted.
Cryptocurrency-focused investment funds attracted about $1.1 billion in the first quarter, spread across just eight vehicles. This number represents the slowest quarter for new fund launches since the third quarter of 2020.
Galaxy attributed part of the transformation to Exchange traded products and digital asset custodial companies, which now compete with investment funds for allocated capital. However, the company emphasized that “cryptocurrency project activity remains relatively healthy overall.”
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