Key Takeaways
- • PitchBook data shows private equity growth investments in defense technology reached $4 billion in the first nine months of 2026, up from $500 million in 2024.
- • Defense PE growth deals rose from 15 in 2024 to 31 in 2025 and 48 through September 2026, with such investments 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, has deployed roughly three-quarters of it, and backs Shield AI and Saronic, according to CNBC.
- • Startups across NATO and allied countries raised $27.1 billion through September 2026, nearly double the 2025 full-year total, per a Dealroom and Resilience Media report.
- • Advent's Shonnel Malani warned of "a very big risk" of a correction and "a lot of froth in the system," while PitchBook's Jim Corridore pushed back on overheating claims.
- • Exits remain a concern: 504 defense PE deals versus 101 exits since 2021, with IPOs accounting for 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 conflict create demand for autonomous drones, missile defense, and satellite systems. According to PitchBook data cited by CNBC, private equity growth investments in defense reached $4 billion in the first nine months of 2026, up from $500 million in 2024. Traditional buyout investors are increasingly backing younger, high-growth firms, a shift that analysts say is blurring the line between venture capital and private equity as defense companies move toward industrial-scale production.
The capital shift is part of a broader surge in defense financing. Startups across NATO and allied countries raised $27.1 billion through September 2026, nearly double the total for all of 2025, according to an October report from Dealroom and Resilience Media. A survey of 250 senior decision-makers at U.K. defense companies by law firm White & Case found that 97% expected to seek significant external funding over the next 12 months. Daniel Turgel, a partner at White & Case, said private equity, venture capital, sovereign wealth funds and family offices were all looking to expand their presence in the sector, many of which had previously been reluctant or restricted from doing so.
PitchBook's Jim Corridore said the number of defense PE growth deals rose from 15 in 2024 to 31 in 2025 and 48 through September 2026, with such deals representing 41% of defense PE deal value in 2026, up from 3% in 2024. Advent International announced in March a commitment of up to $1 billion to next-generation defense technology, including investments in Shield AI and Saronic. Managing partner Shonnel Malani said roughly three-quarters of that commitment has been deployed and that the firm prioritizes proven, customer-validated technologies addressing specific military needs.
Concerns about valuations persist. Malani said defense technology companies are increasingly valued on technological promise rather than revenue, profit or order books, and that a correction may be inevitable; Advent has walked away from several deals because valuations had become "silly." Corridore pushed back against claims the sector is overheated, citing growing budgets, depleted ammunition stocks and new drone and counter-drone technology as sources of steady revenue. Lionel Mestre of Weinberg Capital Partners takes a more conservative approach, focusing on profitable, established defense suppliers and noting that valuations for such targets have not risen significantly.
Exits remain a challenge. 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 an exit. IPOs accounted for 70% of defense PE exit value through September 2026, leaving investors exposed to stock market conditions. Malani noted some startups are rushing to IPO before reaching operational maturity.
The capital shift is part of a broader surge in defense financing. Startups across NATO and allied countries raised $27.1 billion through September 2026, nearly double the total for all of 2025, according to an October report from Dealroom and Resilience Media. A survey of 250 senior decision-makers at U.K. defense companies by law firm White & Case found that 97% expected to seek significant external funding over the next 12 months. Daniel Turgel, a partner at White & Case, said private equity, venture capital, sovereign wealth funds and family offices were all looking to expand their presence in the sector, many of which had previously been reluctant or restricted from doing so.
PitchBook's Jim Corridore said the number of defense PE growth deals rose from 15 in 2024 to 31 in 2025 and 48 through September 2026, with such deals representing 41% of defense PE deal value in 2026, up from 3% in 2024. Advent International announced in March a commitment of up to $1 billion to next-generation defense technology, including investments in Shield AI and Saronic. Managing partner Shonnel Malani said roughly three-quarters of that commitment has been deployed and that the firm prioritizes proven, customer-validated technologies addressing specific military needs.
Concerns about valuations persist. Malani said defense technology companies are increasingly valued on technological promise rather than revenue, profit or order books, and that a correction may be inevitable; Advent has walked away from several deals because valuations had become "silly." Corridore pushed back against claims the sector is overheated, citing growing budgets, depleted ammunition stocks and new drone and counter-drone technology as sources of steady revenue. Lionel Mestre of Weinberg Capital Partners takes a more conservative approach, focusing on profitable, established defense suppliers and noting that valuations for such targets have not risen significantly.
Exits remain a challenge. 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 an exit. IPOs accounted for 70% of defense PE exit value through September 2026, leaving investors exposed to stock market conditions. Malani noted some startups are rushing to IPO before reaching operational maturity.
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