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Wars Have Driven $12.3 Billion in VC Investment Into This Sector

Source Beincrypto

Venture capital funds have poured $12.3 billion into defense technology startups since the start of 2026, nearly double the amount raised over the same stretch last year.

Conflicts in Ukraine and the Middle East have exposed an urgent demand for weapons systems that are cheaper and faster to build. That demand has turned military hardware into one of the year’s most sought-after bets.

VC Funds Pour $12.3 Billion Into Defence Tech in 2026

According to the Financial Times, the figure already exceeds the $9.95 billion the sector attracted across all of 2025. This signals how quickly investor appetite for drones, autonomous vessels, and battlefield artificial intelligence has grown.

The capital is concentrated among a small group of active investors. According to PitchBook, Gaingels, Alumni Ventures, and Andreessen Horowitz ranked among the most prolific check writers in the first quarter.

Daniel Rudnicki Schlumberger, head of JPMorgan’s security and resiliency initiative for Europe, the Middle East, and Asia, noted that the surging valuations come as funds increasingly treat defense as a lasting opportunity.

“We’re seeing the most important change in the way wars are being fought arguably ever,” Schlumberger said.

Crypto Venture Funding Moves the Other Way

The defense rush stands in contrast to crypto, where venture investment has cooled sharply. Galaxy Research found that VCs deployed about $4 billion across 355 crypto deals in the first quarter.

That marked a 50% drop in capital from the prior quarter, though deal count fell only 16%.

“The decline from Q4’s spike was driven primarily by a drop in very large, later-stage financings. The number of completed deals fell much less than the amount of capital invested, indicating that smaller early-stage and seed rounds continued to get done even as Q1 lacked Q4’s concentration of mega-rounds,” Galaxy Research wrote.

Annualized, the pace implies roughly $16 billion in 2026, below last year’s near-$20 billion total. Meanwhile, new fund formation also stalled.

Crypto-focused venture funds drew about $1.1 billion in the first quarter, spread across just eight vehicles. That count marked the slowest quarter for new fund launches since the third quarter of 2020.

Galaxy attributed part of the shift to spot exchange-traded products and digital asset treasury firms, which now compete with venture funds for allocator capital. Still, the firm affirmed that “crypto venture activity remains relatively healthy overall.”

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