Defense Industry Report 2026: USD 679B in Top 100 Arms Revenues

Executive Snapshot

Global demand signals for defense remain structurally elevated. World military expenditure reached USD 2.718 trillion in 2024, a 9.4% increase vs. 2023 and the steepest year-on-year rise since at least the end of the Cold War, with spending up 37% over 2015-2024.

On the supply side, the commercial market for defense primes continues to scale. The SIPRI top 100 arms-producing and military services companies recorded USD 679 billion in arms revenues in 2024, up 5.9% in real terms. This provides a concrete benchmark for industry revenue concentration around the largest defense contractors and systems integrators.

For the US (the largest single-country demand engine), the FY2026 National Defense discretionary request is USD 892.6B, while the Administration’s National Defense grand total reaches USD 1.01T when reconciliation and non-DoD defense are included.

Additionally, Europe’s demand outlook has moved from recovery to a rearmament cycle.

The European Commission reports EU defense spending rising from EUR 218B (2021) to EUR 343B (2024). Defense investments also increased 42% in 2024 to EUR 106B, while procurement of new defense equipment reached EUR 88B.

Demand-to-Revenue Reality Check

Global defense budgets grew 9% in 2024, with the spend uplift explicitly linked to government priorities in cyber, space, and next-gen defense tech. This is a bridge between budget growth and the technology stack.

The same PwC analysis also quantifies scale at the firm level. The top 100 aerospace and defense companies generated USD 922 billion in revenue in 2024.

The European Commission reports new defense equipment procurement of EUR 88 billion in 2024 and defense investments of EUR 106 billion in 2024. These numbers clarify that Europe’s rearmament phase is capital deployment-heavy.

McKinsey’s Europe-focused modeling translates the rearmament narrative into a forward-looking market constraint/opportunity. It projects European defense spending rising from ~2.4% of GDP today to 2.9% by 2030 to reach EUR 800 billion, and links this to large-scale production ramp requirements and potential labor pull.

NATO’s own estimates reinforce this trajectory at the alliance scale. Total NATO defense expenditure is estimated at USD 1.4 trillion in 2025, which is a practical demand floor for programmatic areas like munitions, air defense, ISR, and C2 modernization across allies.

The world’s top 100 defense companies earned USD 679 billion in 2024. It is the highest level recorded since the Stockholm International Peace Research Institute (SIPRI) began tracking in 2002.

The global defense market is estimated at USD 2.75 trillion in 2026. It is projected to reach USD 4.26 trillion by 2035 at a compound annual growth rate of 5% between 2026 and 2035.

StartUs Insights’ Discovery Platform maps more than 8400 defense startups. These firms represent early-stage innovation supporting military systems, security technologies, and defense-focused digital capabilities.

The platform also identifies 28 200 defense companies worldwide. There is a mature industrial base spanning manufacturing, services, systems integration, and advanced technology development.

Startup Spotlight: Defense Industry

Mitekas builds Radio Electronic & Software Solutions

Lithuanian startup Mitekas develops radio electronic and software-driven initiation and counter-UAV systems for defense applications. Its products include T-RAS, M-RAS, M-RAS 2, and Drone Initiators (DI), built with embedded electronics and secure digital communication technologies.

T-RAS functions as a tactical remote activation system that uses a transmitter and multiple receivers to trigger incendiary or explosive devices with digitally encoded radio signals. M-RAS and M-RAS 2 operate as disposable breaching devices. They connect to radio transmitters or wired links to execute controlled detonations in high-risk environments.

Besides, DI systems support FPV and smart munition applications. They use integrated accelerometers, magnetometers, and selectable initiation modes such as impact, delayed impact, manual, and movement-based activation. Further, the safety timers define the conditions for each initiation.

Pragati Defence manufactures Armor Solutions

Indian startup Pragati Defence makes body armor and platform protection systems for military and security forces.

The startup manufactures body armor in the form of ballistic vests, plates, helmets, and shields. These products use UHMWPE and ceramic composite materials to absorb and dissipate ballistic energy, which reduces penetration and blunt force impact at defined protection levels.

Pragati Defence delivers platform protection with the M-RACC multi-role armor architecture. It integrates modular composite elements such as M-RACC KE for kinetic threats, M-RACC IED and M-RACC MINES for blast mitigation, and M-RACC LINER for spall control.

Further, it includes M-RACC OVERMATCH for structural survivability, and M-RACC BOMBLETS and M-RACC SC for drone-delivered and shaped-charge threats. It applies across land, air, and naval platforms in alignment with STANAG 4569 standards.

Defense Unicorns builds Defense DevSecOps Solutions

US-based startup Defense Unicorns creates secure software delivery technology for defense organizations. It builds the UDS platform to package, deploy, and sustain mission applications across cloud, on-premise, tactical edge, and air-gapped environments.

The startup operates UDS Core, a portable open-source runtime platform. UDS Core bundles applications with their dependencies, enforces NIST SP 800-53 technical controls, and supports disconnected operations. It enables package-once, deploy-anywhere workflows suited to resource-constrained and classified settings.

In addition, Defense Unicorns extends this model with UDS Registry. This centralized container registry stores signed and scanned OCI images, Zarf packages, UDS bundles, and SBOM metadata. It also provides version control, controlled distribution, CVE visibility, and CI/CD integration across connected and disconnected networks.

Tiberius Aerospace offers Defense-as-a-Service (DaaS)

UK-based startup Tiberius Aerospace develops precision strike systems and AI-driven defense decision platforms.

The startup offers Sceptre, a ramjet-powered 155 mm artillery-launched munition. It uses liquid-fueled propulsion, AI-enabled guidance, and modular open architecture to achieve long-range precision in GPS-denied environments. Alongside it, Invictus functions as a canister-launched multi-mission missile. Invictus integrates autonomous flight control and flexible payload configurations for extended-range strike missions.

Besides, Tiberius Aerospace supports these weapons with Vault, a containerized autonomous vertical launch system. It enables battery-powered missile deployment at high rates across land, sea, and air operations.

Further, the startup provides GRAIL, an AI operating system that unifies fragmented defense data, models weapon-performance scenarios, and applies lethality and cost-efficiency metrics to guide procurement and operational decisions.

STARK develops AI-based Unmanned Systems

German startup STARK creates modular unmanned combat systems and mission software for modern military operations. It integrates loitering munitions, unmanned surface vessels, and command-and-control technology into a unified battlefield architecture.

The startup operates software-defined systems such as the Minerva Mission Operating System, which translates mission objectives into executable commands. It enables one operator to control multiple unmanned assets, and supports swarm coordination, interoperability, and operations in data-link denied environments.

In addition, STARK delivers Virtus OWE-V loitering munitions, Recce-Strike solutions that connect reconnaissance with strike execution, and Vanta unmanned surface vessels that extend maritime surveillance and strike reach using autonomous, long-endurance operations.

Where the Money Lands

Innovation output totals 66 700 patents filed by 36 700 applicants. These filings demonstrate broad research participation across public institutions, private companies, and defense-focused technology developers.

Further, the yearly patent growth of 4.26% highlights ongoing investment in R&D. The patent leadership is concentrated in China with 40 425 patents. The United States follows with 8130+ patents, reflecting its central role in global defense innovation.

Discover the emerging trends in the defense market along with their firmographic details:

Unmanned Aerial Systems is a key defense trend, with 2600 companies active in surveillance, logistics, reconnaissance, and combat support. This segment employs 263 400 workers worldwide and added 50 employees last year as governments expanded unmanned capabilities and long-range operations. Also, the trend records annual growth of 3.89%.

Electronic Warfare remains an essential defense capability, supported by 1000+ companies developing solutions for signal intelligence, jamming, spectrum control, and cyber-electromagnetic operations. The workforce includes 161 200 employees, with 95 added last year as nations emphasized communication security and countermeasure effectiveness. The annual growth stands at 0.94%, reflecting steady development aligned with modernization and threat mitigation strategies.

Defense Robotics represents a targeted segment, with 190+ companies advancing autonomous ground systems, robotic platforms, and mission-support technologies. This area employs 13 700 workers and added more than five employees last year. Besides, the annual growth of 0.84% indicates gradual adoption as robotics integrates into regulated defense environments.

Funding & Budget Signals: FY2026 DoD Totals USD 961.6B

In the US, private capital has become a measurable input to defense innovation throughput. Since 2021, VC investors have provided defense companies with more than USD 130 billion in funding, alongside ~100 defense startups founded over the same period. This is a concrete justification for tracking venture-backed entrants alongside primes.

McKinsey sizes the global surge in venture activity with a clean headline metric. Global VC investments in defense-related companies rose 33% year-over-year to USD 31 billion in 2024. This fund supports the thesis that capital formation is accelerating in autonomy, sensing, computing, and dual-use infrastructure.

The European Commission’s defense industry roadmap states that venture capital investments exceeded EUR 5 billion in deep tech defense and security startups in 2024. This indicates a broader investable pipeline beyond traditional aerospace and defense incumbents.

For M&A, SIPRI’s top 100 fact sheet highlights how incumbents are buying capabilities. It cites BAE Systems’ acquisition of Ball Aerospace for USD 5.5 billion and Safran’s acquisition of Preligens as examples of primes and tier-1s absorbing space and AI/analytics capacity.

Moreover, the Pentagon’s fiscal year 2026 budget request totals USD 961.6 billion in base funding. It also seeks an additional USD 150 billion under reconciliation legislation. The request allocates USD 197.4 billion to the Army, USD 292.2 billion to the Navy, USD 301.1 billion to the Air Force and Space Force combined, and USD 170.9 billion to defense-wide activities.

The combined value invested by top investors exceeds USD 8 billion, showing concentrated capital deployment across major defense innovators.

Founders Fund co-led defense manufacturing startup Hadrian’s USD 260 million Series C round in July 2025 alongside Lux Capital. Accel led defense tech startup CHAOS Industries’ USD 275 million Series C round in September 2025.

At the program level, the European Defence Fund (EDF) provides a multi-year innovation runway. The Commission states the EDF has EUR 7.3 billion for 2021-2027 to co-finance collaborative defense R&D and capability development. This is directly relevant for cross-border consortium formation and dual-use technology transfer.

Research Approach

This defense industry outlook draws on the StartUs Insights Discovery Platform to analyze 9M+ companies, 25K+ technologies and trends, and 190M+ patents, news articles, and market reports. The analysis is built around mission systems and acquisition reality, plus the industrial enablers that determine whether capability actually scales.

The report also tracks how modernization is being executed under real constraints. This includes multi-year procurement cycles, export controls and compliance, interoperability requirements, and the production bottlenecks that show up most sharply in munitions, electronics, and platform sustainment.

It connects these constraints to observable market signals – budget priorities, capital flows, patenting intensity, and startup activity – to highlight where incumbents can partner, where new entrants can integrate, and where programs stall.