Recent research reveals a sharper decline in funding for UK defence tech companies than in the broader tech sector.
Data from Beauhurst and national security-focused VC firm MD One shows a 75% drop in completed defence tech deals and a 22% decrease in investment in 2023 compared to the previous year.
In 2023, UK defence tech firms secured £76.3 million across 43 deals. Overall tech funding saw a 36% year-over-year decrease in deal numbers. The decline in defence tech funding marks a return to pre-pandemic levels, influenced by an unusually large funding round in 2022.
Despite a growing sentiment that defence tech investment is less taboo post-Ukraine conflict, the data suggests otherwise. However, the sector achieved its second-highest level of grant funding ever recorded.
According to Beauhurst, the UK is home to 313 active, high-growth defence tech companies, spanning fields from robotics to cybersecurity. Notable firms include Materials Nexus, an advanced manufacturing company; aerospace business Greenjets; and cybersecurity firm Lab 1.
The report also highlights the resilience of dual-use sectors, where defence overlaps with other industries.