The 2025 Defense Industry Report encapsulates dynamic change and technological advancement within global defense circles. It explores the latest trends, from cyber security measures to developing unmanned systems, offering a comprehensive overview of the defense landscape. It highlights the pivotal role of emerging markets and the continued evolution of established powers, providing a detailed analysis of industry growth, key players, and prospects.
This report was last updated in January 2025.
This report serves as a reference to multiple investors, major stakeholders, policy makers, and economic analysts. It covers the current market data, employment situation, investment landscape, startup culture, and more.
Executive Summary: Defense Report 2025
- Industry Growth: The data reveals a very slight industry growth contraction of -0.01% over the last year. However, the global aerospace and defense market is projected to grow from USD 985 billion in 2024 to USD 1234 billion by 2028, at a CAGR of 5.8%.
- Manpower & Employment Growth: A robust increase in the defense sector’s workforce, adding over 666 000 new employees. This adds to the global workforce of 11 million employees. The US defense sector employs approximately 2 million people and generates USD 700 billion in revenue.
- Patents & Grants: Defense entities hold over 67 000 patents and have received more than 2750 grants, indicating high levels of innovation and research engagement.
- Global Footprint: Key global hubs in the USA, UK, India, Canada, and Australia, with major city hubs in London, New York City, Washington D.C., Sydney, and Melbourne. Notably, India’s defense budget increased by 4.78% to USD 75 billion during the year 2024-25.
- Investment Landscape: The defense sector data covers over 27 900 funding rounds, highlighting its strategic importance for investors.
- Top Investors: Insight Partners, SoftBank Vision Fund, Tiger Global Management, and more investors have significantly invested, highlighting confidence in the sector’s growth.
- Startup Ecosystem: Five innovative startup features include Global Command & Control Technologies (Advanced Air Defense), Arms Cyber (Zero Day Defense Solutions), DYNOVAS (Advanced Defense Manufacturing), DCube (Defense R&D), and SOTIRIA Technology (Underwater Defense Systems).
Methodology: How we created this Defense Report
This report is based on proprietary data from our AI-powered Discovery Platform, which tracks 25 million companies and 20 000 technologies and trends globally, including detailed insights on approximately 5 million startups, scaleups, and tech companies. Leveraging this extensive database, we provide actionable insights on emerging technologies and market trends.
For this report, we focused on the evolution of the defense industry over the past 5 years, utilizing our platform’s trend intelligence feature. Key data points analyzed include:
- Total Companies working on the trend
- News Coverage and Annual Growth
- Market Maturity and Patents
- Global Search Volume & Growth
- Funding Activity and Top Countries
- Subtrends within the defense industry
Our data is refreshed regularly, enabling trend comparisons for deeper insights into their relative impact and importance.
Additionally, we reviewed external resources to supplement our findings with broader market data and predictions, ensuring a reliable and comprehensive overview of the defense market.
What Data is used to create this Defense Report?
Based on the data provided by our Discovery Platform, we observe that the defense market ranks among the top 5% in the following categories relative to all 20K+ technologies and trends we track.
These categories provide a comprehensive overview of the market’s key metrics and inform the short-term future direction of the market.
- News Coverage & Publications: The defense industry has distinguished itself with more than 6000 publications in the last year.
- Funding Rounds: With data on over 27 900 funding rounds available in our database, the defense sector secures a top ranking for investment activities.
- Manpower Trends: It boasts more than 11.6 million workers and an addition of over 666 000 new employees in the last year.
- Patents: The industry’s innovation and technological advancements are highlighted by its possession of over 67 000 patents.
- Grants: With more than 2750 grants awarded, the defense sector also ranks at the top for research and development funding. This showcases broad support for advancing defense technologies and capabilities.
Explore the Data-driven Defense Industry Report for 2025
The report presents a nuanced landscape of global military tech enterprises. It indicates a marginal decline in industry growth, at -0.01% over the last year, despite a robust increase in the workforce, with the addition of over 66 000 employees. The database lists upwards of 130 000 companies, demonstrating the sector’s vast scale.
The defense market is set to reach USD 676 billion in 2029 at a CAGR of 6.4%.
Credit: The Business Research Company
A Snapshot of the Global Defense Industry
The defense industry showcases significant growth and investment, underpinned by robust manpower and financial metrics. With a total workforce of 11.6 million, the industry has witnessed an impressive increase, adding over 666 000 employees in the last year alone.
This growth highlights the sector’s expanding capacity and its critical role in national security and technology development. This number is only set to increase with the renewal of defense budgets across Europe and also in other parts of the world. For instance, India and Japan signed their first military technology transfer pact for the development of UNICORN mast for naval ships.
Explore the Funding Landscape of the Defense Industry
Financially, the average investment value in the defense sector stands at USD 48 million. This indicates strong investor confidence and the strategic importance of defense technologies. The involvement of more than 9700 investors has resulted in over 27 900 funding rounds, a testament to the vibrant and dynamic nature of investments.
Moreover, these investments have been distributed across more than 11 400 companies. This reflects broad interest in various niches within the defense sector, from aerospace and weaponry to cybersecurity and advanced communications systems. This financial engagement drives innovation and technological advancement. It also underscores the defense industry’s crucial role in global stability and security.
Who is Investing in Defense Technologies?
In the defense industry, the top investors have collectively channeled more than USD 10.5 billion into various companies. This highlights the sector’s strategic importance and the substantial financial commitment from leading financiers.
- Insight Partners leads in investment value, allocating USD 3 billion across 45 companies, demonstrating its significant influence and bullish outlook on the sector’s potential. Rebellion Defense is one of the major receivers of funding from Insight Partners.
- SoftBank Vision Fund follows with an investment of USD 1.6 billion in 7 companies, underscoring its strategic bets on innovative defense technologies.
- Tiger Global Management has committed USD 1.2 billion to 16 companies, reflecting its active engagement and confidence in the industry’s future.
- Kohlberg Kravis Roberts, with a focused investment of USD 1 billion in 5 companies, highlights its targeted approach towards high-potential defense ventures. It acquired military contractor Novaria Group.
- Onex also directs USD 1 billion into 3 companies, indicating a concentrated investment strategy in the sector’s promising areas. It acquired Advanced Integration Technology (AIT) back in 2024. AIT is a major provider of automation, and factory integration for global aerospace, defense, and more.
- Caisse de Depot et Placement du Québec (CDPQ) has invested USD 939 million in 7 companies. This showcases its focus on the industry’s advancement and innovation. CDPQ invested USD 327 million in CAE, a world leader in training and operational support in civil aviation, defense and security, and healthcare markets. This investment made CDPQ the largest shareholder of CAE.
- ManTech’s investment of USD 880 million in 6 companies further emphasizes the sector’s attractiveness to investors looking for growth and development opportunities. ManTech partnered with Marque Ventures to enhance the rapid identification of emerging national security capabilities.
- Accel rounds out this group with USD 864 million invested in 18 companies. It highlights its broad and strategic interest in nurturing the future of the defense industry. Accel also led a USD 145 million series B funding round for CHAOS Industries in 2024.
These investments reflect a robust and dynamic defense industry. Key financiers play a pivotal role in driving forward technological advancements and supporting the development of next-generation defense capabilities.
Top 3 Defense Industry Trends and Innovations
The defense industry is experiencing notable trends, each reflecting the evolving landscape of security and technology.
- Air Defense Systems are at the forefront, with 170+ companies identified and employing over 70 600 individuals. This sector has welcomed 5200+ new employees in the last year, achieving an annual trend growth rate of 6.56%. This growth highlights the increasing global emphasis on aerial threats and the need for sophisticated systems to detect, track, and neutralize incoming threats. It also indicates countries’ prioritization of airspace security, missile defense, and radar systems.
- Proactive Cybersecurity marks another critical trend, with 320+ companies and over 26 000+ employees, bolstered by an addition of 2600+ new employees last year. It is reflected in its annual growth rate of 4.17%. This trend underscores the shifting focus toward preemptive measures in cybersecurity. It emphasizes the development of advanced solutions to anticipate, prevent, and mitigate cyber threats in real time. The growing workforce in this area highlights the sector’s response to the escalating complexity and frequency of cyber attacks.
- Defense Manufacturing, with 440+ companies and 38 500+ employees, sees a slight decline, with an annual trend growth rate of -0.36%. Despite the marginal decrease, the presence of 2400+ new employees last year indicates ongoing efforts to modernize and adapt manufacturing processes. This trend suggests a period of consolidation and efficiency improvement, focusing on innovation in manufacturing technologies. These include additive manufacturing and automation to enhance production capabilities and meet the evolving demands of modern warfare.
5 Top Examples from 697 Innovative Defense Startups
The five innovative startups showcased below are picked based on data including the trend they operate within and their relevance, founding year, funding status, and more. Book a demo to find promising startups, emerging trends, or industry data specific to your company’s needs and objectives.
Global Command & Control Technologies specializes in Advanced Air Defense
Global Command & Control Technologies is a South Africa-based startup that specializes in advanced surveillance, control, and air defense systems. Its SCAD platform integrates a suite of sensors and effectors, ensuring comprehensive situational awareness for strategic operations. This system supports real-time decision-making through its advanced analytics and robust communication networks.
The platform offers interoperability with various defense assets, streamlining command and control processes. Global Command & Control Technologies equips the SCAD system with electronic warfare and cyber defense capabilities. This enhances battlefield effectiveness and adapts to evolving military needs.
Arms Cyber provides Zero Day Defense Solutions
US-based startup Arms Cyber specializes in proactive 24×7 cybersecurity through its Phalanx platform. It enhances endpoint and cloud data protection. Phalanx Endpoint secures systems by thwarting potential threats proactively, while Phalanx Cloud shields cloud-stored data around the clock.
The platform’s moving target defense (MTD) mechanism safeguards vulnerable applications from memory corruption. Phalanx also promises to halt fileless and in-memory attacks, addressing gaps left by traditional antivirus and endpoint detection response solutions. By dynamically altering in-process memory, it strengthens defenses against unpatched and unknown vulnerabilities.
DYNOVAS improves Advanced Defense Manufacturing
Dynovas is a US-based startup that operates as an aerospace and defense contractor, delivering comprehensive engineering solutions. It specializes in composite fabrication, utilizing advanced processes for solid laminate and honeycomb sandwich structures.
Dynovas possesses a broad spectrum of manufacturing capabilities, working with various advanced materials, metals, plastics, and ceramics. The startup also offers inspection and testing services, including standard ASTM materials testing, pressure vessel testing, and full-scale structural system testing. Precision inspection employs FARO and Laser Tracking techniques, ensuring meticulous quality control.
DCube advances Defense R&D
Italian startup DCube specializes in the research and development of advanced defense technologies. The firm designs mechanical and electrical components compliant with MIL-STD, leveraging extensive military experience and partner collaborations.
Its expertise extends to the development of both software and hardware, overseeing the full production cycle. Further, DCube collaborates with partners to forge innovative military products.
SOTIRIA Technology develops Underwater Defense Systems
Greek startup SOTIRIA Technology specializes in advancing the European Aerospace and Defense industry through scientific AI solutions. Its product, Type S, is a fluxgate magnetic sensor for detecting high displacement ferromagnetic threats. Type A serves as an advanced passive hydrophone for a range of displacement masses.
Dioptre, the backbone of its detection solutions, operates as an AI-powered software platform. Nereid represents a scalable AI-driven system for underwater warfare intelligence, surveillance, and reconnaissance. These innovations support critical maritime terrain and infrastructure security. The company works on transitioning to a safer future with its sustainable AI solutions.
Gain Comprehensive Insights into Defense Industry Trends, Startups, and Technologies
The Defense Industry Report underscores the sector’s vigorous adaptation to new geopolitical realities and technological frontiers. The industry’s trajectory points towards increased investment in cybersecurity, the expansion of unmanned systems, and the integration of artificial intelligence. As the defense sector navigates these complexities, the insights provided in this report will serve as a reference for future planning and development within this ever-critical industry. Get in touch to explore 650+ startups and scaleups, as well as all industry trends impacting various defense stakeholders.
