For Gundbert Scherf, Helsing co -founder in Germany, the most valuable defense startup in Europe, the Russian invasion of Ukraine changed everything.
Scherf had to fight hard to attract investments after founding his company, which produces drones of military attack and artificial intelligence for the battlefield, four years ago.
Now, that is the slightest of his problems. The company based in Munich far Duplicate its valuation, reaching 12,000 million dollars, in a fundraising last month.
“This year, for the first time in decades, Europe is spending more on the acquisition of defense technology than the United States,” said Scherf.
The former McKinsey & Company says that Europe could be about to experience a transformation in innovation in defense similar to the Manhattan project, the scientific impulse that promoted the United States to quickly develop nuclear weapons during World War II.
“Europe is assimilating the defense.”
Reuters interviewed two dozen executives, investors and politicians to analyze how Germany, the largest economy in Europe, aspires to play a central role in the rearma of the continent.
The Friedrich Merz Chancellor Government considers the AI and the technology of key startups for his defense plans and is drastically reducing the bureaucracy to connect the startups directly with the high spheres of his army, the sources to Reuters reported.
Modified by the trauma of Nazi militarism and a strong pacifist spirit of postwar, Germany maintained a relatively small and cautious defense sector, protected by US security guarantees.
The German business model, marked by deep risk aversion, also prioritized gradual improvements on disruptive innovation.
It’s over. Given the current uncertainty about US military support, Germany, one of Ukraine’s largest sponsors, plans almost tripling its regular defense budget, until reaching about 162,000 million euros (175,000 million dollars) per year for 2029.
Much of that money will go to reinvent the nature of war.
Helsing is part of a wave of emerging German defense companies that develop avant -garde technology, from artificial intelligence robots similar to non -manned tanks and minisubmarines to spies ready for combat.
“We want to help Europe recover their courage,” said Scherf.
Some of these small businesses now advise the government together with consolidated companies – the so -called frontline companies, such as Rheinmetall and Hensoldt – that have less incentives to focus mainly on innovation, given their long portfolio of orders for conventional systems, according to one of the sources.
A new public procurement bill, approved by the Merz cabinet this Wednesday, seeks to reduce obstacles for startups with liquidity problems to join tenders, allowing payment in advance.
The law would also empower the authorities to limit tenders to bidders within the European Union.
Marc Wietfeld, executive director and founder of the Autonomous Robot manufacturer Arx Robotics, said that a recent meeting with German Defense Minister Boris Pistorius, recalciated the depth of the rethinking in Berlin.
“He told me: ‘Money is no longer an excuse, now it is.’ That was a turning point,” he said.
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Germany seeks to be at the lead in military defense
From Donald Trump’s return to the political scene and his renewed questioning of the United States commitment to NATO, Germany promised to meet the new alliance objective to allocate 3.5% of GDP to defense spending by 2029, a faster term than that of most of its European allies.
The authorities in Berlin emphasized the need to boost a European defense industry instead of depending on US companies. However, obstacles to boost the expansion of industry leading companies in Germany, and in Europe in general are considerable.
Unlike the United States, the European market is fragmented. Each country has its own acquisition standards to comply with the contracts.
The United States, the world’s largest military investor, already has a consolidated group of defense giants, such as Lockheed Martin and RTX, and an advantage in key areas, such as satellite technology, combat airplanes and guided precision ammissions.
Washington also began promoting defense technology startups in 2015, including Shield AI, the Anduril drone manufacturer and the Palantir software company, awarding them part of military contracts.
Until recently, European startups were in a situation of government support.
However, an Aviation Week analysis published in May showed that it was projected that the 19 European countries with the highest defense expenditure, including Turkey and Ukraine, would spend 180,100 million this year on military acquisitions, compared to the 175.6 billion of the United States. Washington’s total military spending will remain higher.
Hans Christoph Atzpodien, director of the German Association of the BDSV Security and Defense Sector, said that a challenge was that the army’s acquisition system was oriented to consolidated suppliers and did not adapt well to the rapid rhythm demanded by new technologies.
The German Ministry of Defense declared in a statement that it was taking measures to accelerate acquisitions and better integrate startups so that new technologies were quickly available for Bundeswehr.
Annette Lehnigk-Emden, head of the powerful acquisition agency of the Armed Forces, highlighted the drones and AI as emerging fields that Germany needs to develop.
“The changes that are introducing in the battlefield are as revolutionary as the introduction of the machine gun, the tank or the plane,” he told Reuters.
Spy cockroaches
Sven Weizenegger, director of the Cybernetics Innovation Center, the Bundeswehr innovation accelerator, said that the war in Ukraine was also changing social attitudes, eliminating stigma towards work in the defense sector.
“Germany has developed a new openness towards the issue of security from the invasion,” he said.
Weizenegger commented that he received between 20 and 30 LinkedIn applications per day, compared to the 2 or 3 per week of 2020, with ideas to develop defense technology.
Some of the development ideas seem of science fiction, such as the Ciporg cockroaches of Swarm Biotactics, equipped with specialized miniature backpacks that allow the collection of real -time data through cameras, for example.
Electrical stimuli should allow humans to control the movements of distance insects. The objective is to provide surveillance information in hostile environments, for example, information on enemy positions.
“Our Biorrobots, based on living insects, are equipped with neuronal stimulation, safe sensors and communication modules,” said executive director Stefan Wilhelm. They can be directed individually or operate autonomously in swarms.
In the first half of the twentieth century, German scientists were pioneers in many military technologies that became world standards, from ballistic missiles to reaction aircraft and guided weapons. However, after his defeat in World War II, Germany was demilitarized and his scientific talent dispersed.
Wernher Von Braun, who invented the first ballistic missile for the Nazis, was one of the hundreds of German scientists and engineers transferred to the United States after World War II, where he subsequently worked at NASA and developed the rocket that took the spacecraft Apollo to the Moon.
In recent decades, innovation in defense was a powerful engine of economic progress. Technologies such as the Internet, GPS, semiconductors and reaction engines emerged in military research programs before transforming civil life.
Affected by high energy prices, the deceleration of the demand for its exports and the competition of China, the German economy, of 4.75 billion dollars, contracted in the last two years. Expanding military research could provide an economic impulse.
We only need “we must adopt this mentality: a strong defense industrial base means a strong economy and steroid innovation,” said Markus Federle, managing partner of the Specialized Investment Firm in Defense Tholus Capital.
With Reuters information
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