What Ukraine can teach the world about defence tech

As the urgent need for defence investment in Europe ramps up, Ukrainian defence tech is pushing ahead with innovations in aerial and water-based drones, robotics, electronic warfare and air defence systems, driven by the pressure of needing an advantage on the battlefield.  

Investors and people working in Ukraine believe that the country’s battle-hardened startup technology could disrupt the sluggish peacetime defence industries of other countries – not just with new technology, but also by rewriting the rules on how equipment is tested and procured. And while interest from foreign investors and arms companies is warming up, they believe there is still a lot of unexplored opportunity.

“I want to see more corporate venture capital here,” says Anton Verkhovodov, a partner with D3, one of the few Ukrainian defence tech VC firms. Verkhovodov is a champion of Ukrainian innovation and thinks that corporate venturing could help realise the potential of the sector.  

“If you want to scale, if you’re going to go after the markets in Nato member states, if you want to build a truly big defence company, defence expertise is critical,” he says.

“And this is where corporates could be the springboard for this wave of startups, either acquiring them, or becoming the integrators, or having joint ventures.”

D3’s portfolio companies mainly consist of drone technologies, including the unmanned aerial vehicles (UAV) themselves, software for their navigation or AI-powered autonomy, through to enemy UAV interception and detection equipment.

One of the companies is Zvook, which installs a network of acoustic sensors to detect low-flying objects including drones and cruise missiles, and which can be placed near infantry or civilian populations. Another, Airlogix, began life as a cargo drone developer in 2020, but adapted to military use in 2022. It makes catapult-launched reconnaissance drones with a backup navigation system, designed for operating in areas where the enemy is jamming signals.  

Generally, Verkhovodov thinks the West has not yet fully grasped the level of development that is happening in Ukraine. In part, he says, this is because Ukraine’s society is geared towards the war effort, and with its resources stretched, it cannot spare the time and energy needed to promote its industry abroad. And defence is a conservative industry that is traditionally difficult to disrupt.

“You need face to face connections to build trust, to convey information. And you cannot really travel that easily to Ukraine,” he says.

Over the last few days, US president Donald Trump’s direct talks with Vladimir Putin on a potential ceasefire have pushed European countries into considering a more unified policy on defence. While the future of the conflict is unclear, there is an unmistakable trend towards greater European defence autonomy, with the EU announcing that it plans to temporarily lift its fiscal restrictions to allow for greater military spending by member states. There will almost certainly be a renewed drive to source cutting-edge technology.

“If Europe is truly serious about stepping up its defence game, all EU countries should emphasise defence tech, not traditional platforms. Ukraine is a clear short cut to acquire these capabilities and the TTPs [tactics, techniques and procedures],” Verkhovodov says.

He has a simple pitch for the Ukrainian defence tech industry. “We have so many people, so many teams working on drones, electronic warfare, software autonomy, swarming, sensors, you name it,” he says.

And the key factor?

“This stuff actually works.”

How to make stuff that actually works

The Ukrainian government has worked to support the growth of all this technology which Verkhovodov finds so impressive.

In 2023, the Ministry of Digital Transformation launched Brave1, a platform that takes defence tech ideas, evaluates them and then fast-tracks the best ones for development and military deployment. It allocates grant funding to get the initiatives off the ground. Once they are established as startups, it also tries to secure backing from external investors.

Artem Moroz, head of investor relations at Brave1, says they encourage all ideas, which can be submitted by anyone in Ukraine.

“A lot of the startups are actually coming from the guys who went to the military, like in 2022 for instance,” he says.

“They served in some way, they didn’t like the equipment they were working with, or they felt it lacked something, or they saw a problem, and they started to build this [new technology] based on that particular need of the unit they [served in].”

And what works for one unit can then be applied up and down the front line.

One reason the technology is so impactful is that individual brigades can put forward requests for a product that a startup proposes to make, based on a specific need on the battlefield.

Brave1 can use this proof of interest to start a product’s certification, the process through which it is tested and refined to then obtain a Nato stock number, thereby becoming an official defence tech product that can be produced at scale and procured by the Ukrainian MoD and defence ministries globally. The technology is often tested against realistic battlefield conditions. For example, a new drone design is put up against jamming systems and fitted with live explosives.

Within what Moroz calls the “decentralised” procurement system, brigades command their own budgets, which are sometimes sourced from donations. They can order a particular technology that they need, so the latest startup innovations have an immediate customer pipeline.

The focus is on being ruthlessly efficient in readying the best technology for war. Moroz says that the programme has stripped away the cumbersome bureaucracy that so often holds up defence procurement. A startup can obtain a Nato stock number within a matter of weeks, compared to the months – or even years – it can take outside of Ukraine.

“In wartime you need to change and adapt,” he says.

“You try to look for what really matters, what is essential in the [procurement] process, and you try to cut what’s not that critical. It’s very hard to do that [in peacetime] when you don’t have enough stress in the system.”

Brave1 is credited with helping create a range of technologies used on the lines. The AD Counter FPV system is one. This is a battery-powered machine worn as a backpack that uses a burst of white noise to interrupt an enemy drone’s connection with its operator, effectively disabling it.

Another is the Partner-VS, a de-mining ground robot that can be programmed to follow GPS coordinates. It is designed to work across difficult terrain and can not only clear mines but also evacuate the wounded.

Moroz believes that Ukrainian defence tech startups are underexploited by investors, especially outside of Ukraine. He says the technology is responsive to the latest developments on the front line, is battle-proven, and that valuations are low because Ukraine has less-developed capital markets compared to many other European countries.

“The interest is definitely growing,” he says.

Natalia Kushnerska, Brave1’s CEO and leader from April 2023, wrote in a February Kyiv Independent article that investment from both foreign and domestic investors totaled $40m in 2024, an eightfold increase from 2023.

But Moroz says there is still something of a blockage for investment, with many investors hamstrung by fund rules that forbid investing in defence tech. He believes that there has been a cultural shift towards an acceptance of the need to support weapons technology development, but that fund mandates have not yet caught up.

“In a lot of cases, the LPs are limited from investing in defense, because defense used to be a non-investable industry. [That] has changed in the last three years, probably in the last two years. This is like the big gap that I believe we should all talk about, because money is there, the intention to [invest] is there, but the historic restrictions on the mandate are also there.”

We don’t do dual-use: The Ukrainian defence tech accelerator

Kateryna Bezsudna is the co-founder and CEO of Defence Builder, a Ukrainian defence tech startup accelerator. She has also encountered investors that are wary of their funds’ defence mandates, which stipulate investment must be into dual-use technology, meaning it has both a civilian and military application. Some told Defence Builder that they could not support technology designed for warfare.

“We had a lot of rejections [from investors] because when we pitched an idea they said, ok, but we are a dual-use fund. Let’s do it dual-use. Let’s make a drone that can make a reconnaissance of penguins. I say, look: I am very sorry about your penguins, but now my penguins are Russians, so I have to take a look at them.”

Defence Builder takes startups that have a proven product and either a supply agreement or some level of investment. That means most of its cohort will have started with Brave1, moving to the accelerator once they have secured verification of the product for use by the army general staff.

The accelerator works with the startups to refine their product for use on the front line on testing grounds. It also works closely with investors to understand the kind of things they are looking for, and shows its cohort’s technology to the military, working with them to get feedback and to build the commercial relationship. It is currently putting together its second startup cohort.

Companies from the first batch include Hard Cat, which makes waterborne drones for reconnaissance and attacks against small boats. Another, Tonitruum, makes an autonomous targeting system for UAV drones, so they can operate despite Russian jamming.

As with Brave1, there is a focus on speed.

“I have to be sure that the product will work [within] six months. Why six months? Because it’s the average period where Russians use another sort of weapon, and we need to find some asymmetrical solution for them to be defeated,” says Bezsudna. 

Defence Builder works on speeding up the document flow to get MoD and general staff support – something busy startups might not have enough time for. It pitches the startups’ technology directly to brigade commanders, arranges rounds of testing and seeks immediate feedback from the military that can be relayed to the startup.

Bezsudna says that Defence Builder can also help international defence producers that are looking to learn from Ukraine’s military expertise.

“[We are] an entry point for international brands,” she says.

“We’ve got a huge network. We cooperate with Brave1, with the MoD, military brigades, and help to navigate the bureaucratic challenges which can appear if you are in Ukraine for the first time.”

She says the interest is especially keen from the Nordic and Baltic countries that have a border with Russia. “They understand that Russians will not stop and they need to take care of their regions and territories,” she says.

External companies can use Ukrainian engineers who have experience of making products that go to the front line. They are also cheaper than the equivalent team would be in the US or other European countries.

“You can hire a great team, pay for it in Ukraine locally, but you can get contracts from the DOD [Department of Defence] in the United States or other MoDs in the Nordics or Baltics, and it helps [Ukrainian engineers also] to be more developed and more skilled,” says Bezsudna.

Quantum Systems, a German drone design and manufacturing company, began operating in Ukraine in 2024. It has received funding from corporates such as Airbus, through the Airbus Ventures CVC, and Porsche, the German carmaker.

Larger companies have also moved in. BAE Systems set up an entity there in 2023, which it said would allow the company to “explore potential partners”. Rheinmetall, a German arms manufacturer, announced in 2024 that it would open a plant in Ukraine; it had previously started a joint venture in Kyiv with a Ukrainian state-owned defence company.

Not only does this kind of involvement help the Ukrainian war effort, but it can also lend strategic insight to the company operating in Ukraine. Bezsudna believes Ukraine’s pioneering robotics, drones and electronic warfare tech has the capability to disrupt the wider defence industry. Just like Artem Moroz from Brave1, she stresses the importance of having cut down on bureaucracy.

“Definitely the problem [for other countries’ defence industries] is that they are so bureaucratic and so slow,” she says.

To really learn what Ukrainian defence tech startups can teach, however, companies have to be present in Ukraine, says Bezsudna.

“It’s like a strategic question. Are you investing in Ukraine? Do you want to set up any offices here? To be involved on the Polish border, or to set up an innovation hub in Poland, it will not work. You have to be located in Ukraine.”