Key Takeaways
- • Private equity growth investments in defense technology reached $4 billion in the first nine months of 2026, up from $500 million in 2024, according to CNBC reporting on PitchBook data.
- • Defense PE growth deals rose from 15 in 2024 to 31 in 2025 and 48 through September 2026, with growth deals accounting for 41% of defense PE deal value in 2026 versus 3% in 2024.
- • Advent International committed up to $1 billion to next-generation defense technology in March and has deployed roughly three-quarters of it, with Advent's Shonnel Malani warning of a "very big risk" of a correction.
- • Startups across NATO and allied countries raised $27.1 billion in venture capital through September, nearly double the 2025 total, per Dealroom and Resilience Media.
- • Exits remain a concern: PitchBook counts 504 defense PE deals but only 101 exits since 2021, and IPOs make up 70% of defense PE exit value through September 2026.
Summary
Private equity firms are committing billions to defense technology as rising military spending and geopolitical tensions drive demand for autonomous drones, missile defense and satellite systems. According to CNBC, PE growth investments in defense reached $4 billion in the first nine months of 2026, up from $500 million in 2024. PitchBook data show defense PE growth deals climbed from 15 in 2024 to 31 in 2025 and 48 through September 2026, and such deals accounted for 41% of defense PE deal value in 2026, compared with 3% in 2024. PitchBook lead industrials analyst Jim Corridore said, "It is clear to me that PE is moving into territory VC used to own."
The private capital push coincides with a surge in venture funding. Startups across NATO and allied countries raised $27.1 billion through September, nearly double the total for all of 2025, according to an October report from Dealroom and Resilience Media. Daniel Turgel, a partner at law firm White & Case, said private capital is now playing a critical role in financing defense technology. A White & Case survey of 250 senior decision-makers at U.K. defense companies found that 97% expected to seek significant external funding over the next 12 months. Turgel said private equity, venture capital, sovereign wealth funds and family offices are all looking to invest more, a shift from a few years ago when many were reluctant or restricted.
Advent International announced in March a commitment of up to $1 billion to next-generation defense technology, including investments in autonomous systems developers Shield AI and Saronic. Managing partner and global head of aerospace and defense Shonnel Malani told CNBC the firm has deployed roughly three-quarters of that commitment and described its move into younger companies as a natural extension of existing holdings in mature defense businesses. Malani said Advent prioritizes proven technologies validated by customers, but also cautioned that defense technology companies are increasingly valued on technological promise rather than revenue, profit or order books. He said there is "a lot of froth in the system," that Advent had walked away from several deals because valuations had become "silly," and that a correction may be inevitable.
Not all investors share the bubble concern. Corridore pushed back against the view that the sector is overheated, arguing that rising budgets, depleted ammunition stocks and new drone and counter-drone technology provide the steady revenue PE needs. Lionel Mestre, partner at French firm Weinberg Capital Partners, said his firm focuses on profitable, established suppliers with positive cash flow, and that valuations for those targets have not risen significantly. He sees opportunities to fund manufacturing expansion and consolidate Europe's fragmented defense supply chain, while viewing the drone market as too immature for a buyout strategy. He added that European institutional attitudes toward defense have shifted significantly since Donald Trump's return to the White House.
Exit risk remains a key question. According to PitchBook, there have been 504 defense PE deals but only 101 exits since 2021, though that comparison includes add-on acquisitions and does not directly measure the share of investments awaiting exit. IPOs accounted for 70% of defense PE exit value through September 2026, leaving investors exposed to stock market conditions. Malani also said some startups are rushing toward IPOs before reaching the operational maturity needed to sustain public-company status.
The private capital push coincides with a surge in venture funding. Startups across NATO and allied countries raised $27.1 billion through September, nearly double the total for all of 2025, according to an October report from Dealroom and Resilience Media. Daniel Turgel, a partner at law firm White & Case, said private capital is now playing a critical role in financing defense technology. A White & Case survey of 250 senior decision-makers at U.K. defense companies found that 97% expected to seek significant external funding over the next 12 months. Turgel said private equity, venture capital, sovereign wealth funds and family offices are all looking to invest more, a shift from a few years ago when many were reluctant or restricted.
Advent International announced in March a commitment of up to $1 billion to next-generation defense technology, including investments in autonomous systems developers Shield AI and Saronic. Managing partner and global head of aerospace and defense Shonnel Malani told CNBC the firm has deployed roughly three-quarters of that commitment and described its move into younger companies as a natural extension of existing holdings in mature defense businesses. Malani said Advent prioritizes proven technologies validated by customers, but also cautioned that defense technology companies are increasingly valued on technological promise rather than revenue, profit or order books. He said there is "a lot of froth in the system," that Advent had walked away from several deals because valuations had become "silly," and that a correction may be inevitable.
Not all investors share the bubble concern. Corridore pushed back against the view that the sector is overheated, arguing that rising budgets, depleted ammunition stocks and new drone and counter-drone technology provide the steady revenue PE needs. Lionel Mestre, partner at French firm Weinberg Capital Partners, said his firm focuses on profitable, established suppliers with positive cash flow, and that valuations for those targets have not risen significantly. He sees opportunities to fund manufacturing expansion and consolidate Europe's fragmented defense supply chain, while viewing the drone market as too immature for a buyout strategy. He added that European institutional attitudes toward defense have shifted significantly since Donald Trump's return to the White House.
Exit risk remains a key question. According to PitchBook, there have been 504 defense PE deals but only 101 exits since 2021, though that comparison includes add-on acquisitions and does not directly measure the share of investments awaiting exit. IPOs accounted for 70% of defense PE exit value through September 2026, leaving investors exposed to stock market conditions. Malani also said some startups are rushing toward IPOs before reaching the operational maturity needed to sustain public-company status.
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