Who’s buying defense tech startups?
In our defense tech market deck, you will find everything you need to understand the market
SUMMARY
Defense tech startups are being bought by a much wider set of buyers than the old defense primes: emerging defense-tech consolidators, adjacent industrial companies, private-equity platforms and well-funded defense startups themselves now sit on the buy side.
Acquisition activity is genuinely accelerating. In our 33-deal sample, 22 acquisitions fell in the latest 12 months versus 11 in the previous 12, but venture funding is still growing faster than exits, so the market is creating potential targets faster than buyers are absorbing them.
The most interesting buyers today are companies using M&A to change category. AeroVironment, Anduril, Redwire and Firefly are buying their way from specialist positions into broader defense platforms rather than simply adding incremental products.
Motorola Solutions is one of the clearest signs that the buyer universe has widened. Its announced Silvus and D-Fend deals represent at least $5.9 billion of upfront value for tactical networking and counter-drone capabilities that sit next to its existing communications and security business.
The biggest checks are going to companies that already control something painful to reproduce: deployed systems, production capacity, classified infrastructure, scarce engineering know-how, military customer access or technology embedded inside an important mission.
The hardware-versus-software distinction is less useful than it first appears. Buyers will pay for software when it is deeply tied to aircraft, sensors, battlefield networks, missile warning or other operational systems; a promising AI layer on its own has much weaker evidence behind it.
A newer pattern is that defense startups are buying industrial companies themselves. Helsing buying Grob and Anduril buying propulsion, aircraft and rugged-computing capabilities show that some venture-backed players are assembling their own industrial base instead of waiting to be acquired by one.
Private equity is also doing a large amount of the consolidation work behind the scenes. Sponsors are building government-technology platforms through repeated acquisitions, and those platforms can later become strategic targets themselves, as BlueHalo did before its sale to AeroVironment.
Repeat contracts and manufacturing capacity have become acquisition assets in their own right. A buyer can shortcut years of procurement friction, testing, production learning and customer validation by buying a company that already has the contracts, factories or deployments.
The likely market structure is becoming clearer: smaller specialists get acquired, while the best-capitalized defense-tech unicorns stay independent longer and increasingly become buyers. Some of the startups created to challenge the old primes are already building the next generation of defense giants.
Are defense tech startups actually getting bought more often?
Yes. Defense tech startup acquisitions are happening more frequently now, although the exit market is still much smaller than the funding boom around it.
In our review of 33 meaningful defense-tech acquisitions announced or completed across a recent 24-month period, 22 happened in the latest 12 months, compared with 11 in the previous 12. The targets covered drones, counter-drone systems, secure communications, space, electronic warfare, cyber, battlefield software and defense manufacturing. The increase is broad enough that we would no longer describe defense M&A as a handful of opportunistic deals.
But there is a useful contradiction here. S&P Global Market Intelligence found that overall aerospace and defense M&A had fallen from its 2021 peak even while defense-focused venture funding was hitting records. PitchBook's broader definition, which includes dual-use companies, put defense-tech venture funding at $49.1 billion in 2025, up from $27.2 billion the year before. Its latest 2026 data show capital continuing to pour into the sector.
So exits are clearly picking up, but startups are still being created and financed faster than buyers are absorbing them. That gap is one reason we should expect more consolidation later.
| What we measured | Result |
|---|---|
| Defense-tech deals in our 24-month sample | 33 |
| Latest 12 months | 22 |
| Previous 12 months | 11 |
| Change in deal frequency | 2x |
| PitchBook defense-tech funding in 2025 | $49.1B |
Are Lockheed Martin, RTX and the big defense primes still the main buyers?
No. Lockheed Martin, RTX, L3Harris and the other traditional primes still buy defense companies, but they no longer dominate the defense-tech startup exit story.
Lockheed recently agreed to pay $3.45 billion for Ultra Maritime, adding a major undersea-warfare supplier, and it has also added Amentum's Rapid Solutions business. L3Harris's acquisition of Aerojet Rocketdyne remains another major example of a prime buying a strategically scarce capability. SAIC has moved in the same direction at a smaller scale with its roughly $205 million purchase of cyber and mission-software company SilverEdge.
Yet many of the deals shaping defense tech lately come from a different group of buyers. AeroVironment acquired BlueHalo. Redwire acquired Edge Autonomy. Firefly Aerospace acquired SciTec. Motorola Solutions bought Silvus Technologies and has now agreed to buy D-Fend Solutions. Anduril has spent years acquiring companies across aircraft, underwater autonomy, propulsion, sensing and battlefield computing.
Traditional primes are only one exit route these days. A second tier of acquisitive defense and dual-use technology companies is now large enough to compete with them for attractive assets.
This market map, featured in our defense tech market deck, highlights top companies and startups in the defense tech market
Who is buying the most interesting defense tech companies today?
AeroVironment, Anduril, Motorola Solutions, Redwire and Firefly are among the buyers we would watch most closely now because acquisitions are changing what these companies can actually do.
AeroVironment provides the clearest example. Since 2021 it has bought Arcturus UAV, Planck Aerosystems, Tomahawk Robotics, BlueHalo and ESAero, among other assets. The roughly $4.1 billion BlueHalo transaction was especially important because it added counter-UAS, electronic warfare, directed energy, space and cyber capabilities to a company historically associated with drones and loitering munitions.
Anduril has followed its own version of the same strategy. Area-I added unmanned aircraft. Dive Technologies added autonomous underwater vehicles. Adranos brought solid-rocket propulsion. Blue Force Technologies added an advanced aircraft program. Klas added rugged tactical computing and networking.
Redwire's $925 million Edge Autonomy acquisition moved the space company deeper into autonomous aircraft. Firefly spent about $855 million on SciTec to combine launch and spacecraft hardware with missile-warning, tracking and national-security software.
These companies are buying the pieces required to become broader defense platforms rather than staying specialists.
| Buyer | Selected acquisitions | What the acquisitions add |
|---|---|---|
| AeroVironment | BlueHalo, Tomahawk Robotics, ESAero, Arcturus | Autonomy, counter-UAS, EW, directed energy, manufacturing |
| Anduril | Area-I, Dive, Adranos, Blue Force, Klas | Aircraft, underwater systems, propulsion, tactical compute |
| Motorola Solutions | Silvus, D-Fend | Battlefield networks, counter-drone systems |
| Redwire | Edge Autonomy | Uncrewed aircraft |
| Firefly Aerospace | SciTec | Missile defense, sensing and national-security software |
If you want more recent data on this point, please see our latest defense tech market report.
Why is Motorola Solutions suddenly spending billions on defense tech?
Motorola Solutions has become one of the most aggressive new defense-tech buyers because military communications and counter-drone systems sit surprisingly close to businesses it already understands.
Its Silvus Technologies deal was hard to dismiss as an experiment. Motorola paid $4.4 billion upfront, with another $600 million potentially payable through earnouts, for a company whose mobile ad-hoc networking systems connect soldiers, vehicles, sensors and autonomous systems in difficult environments.
Motorola then agreed to pay $1.5 billion for D-Fend Solutions. D-Fend makes RF-based counter-drone systems that can detect and take control of unauthorized drones without relying on conventional kinetic interception or broad jamming. Motorola said D-Fend's revenue had grown by more than 50% annually during the previous three years and was expected to reach about $185 million in 2026.
Taken together, Silvus and D-Fend represent at least $5.9 billion of announced upfront acquisition value. That makes Motorola one of the strongest pieces of evidence that defense startups can now attract buyers from outside the traditional defense-industrial base.
The logic is fairly simple. Motorola already sells mission-critical communications and security systems. Modern battlefields increasingly require the same things, except the network now has to connect drones, autonomous vehicles and sensors while surviving jamming and attacks. Defense has moved closer to Motorola's core market.
As this chart shows, and as featured in our defense tech market deck, search interest in defense tech has risen sharply
What kind of defense tech are buyers willing to pay billions for?
Right now, the biggest checks are going to defense companies that already control something difficult to reproduce: deployed hardware, manufacturing capacity, military customer relationships, classified infrastructure or a technology that sits inside an important mission.
Silvus came with deployed tactical networking products and military customers. D-Fend says its counter-drone technology has thousands of deployments across more than 30 countries. BlueHalo brought products spanning counter-UAS, directed energy, electronic warfare, cyber and space. Edge Autonomy came with field-proven uncrewed aircraft.
Firefly's SciTec deal shows that software can command a large price too, provided that the software is deeply embedded in real military programs. SciTec generated about $164 million of trailing revenue before the acquisition and brought more than 475 employees, classified facilities, missile-warning technology and established national-security contracts. Since Firefly bought it, SciTec has continued winning substantial work, including a roughly $94 million Space Force radar-digitization award and roles in major missile-defense programs.
The market currently rewards companies that have already crossed some of the painful distance between an invention and an operational military capability.
If you want more recent data on this point, please see our latest defense tech market report.
Do defense buyers care more about hardware than software now?
Defense buyers clearly have a strong appetite for hardware today, but what they seem to value most is software attached to something operationally difficult.
Pure software can still be attractive. SAIC bought SilverEdge for cybersecurity, AI, analytics and mission software. Firefly bought SciTec largely for software, algorithms and data processing. Yet both targets already worked deeply inside U.S. defense and intelligence missions.
The largest acquisitions often contain an unavoidable physical layer. BlueHalo included directed-energy and counter-drone hardware. Edge Autonomy makes aircraft. Silvus makes radios and networking equipment. D-Fend integrates RF sensing and counter-UAS technology. Rheinmetall bought Loc Performance partly for its factories and vehicle-production capabilities.
Software becomes particularly valuable when it controls the aircraft, processes the sensor data, connects the battlefield or improves an existing weapons system. Buyers have shown far less evidence that they will pay strategic prices simply for a promising AI layer that has not yet become part of an operational military system.
This chart, included in our defense tech market deck, shows annual VC investment in defense tech startups
Are defense tech startups starting to buy old industrial companies themselves?
Yes. Some of today's best-funded defense startups are buying manufacturing and engineering capabilities that previous generations of startups would have expected a prime contractor to provide.
Helsing is a particularly clean example. The European defense company started with an AI-heavy identity and then acquired German aircraft manufacturer Grob Aircraft. Grob brought decades of aircraft engineering, composite manufacturing, production facilities, an airfield and an existing aviation business.
Helsing subsequently unveiled the CA-1 Europa autonomous combat aircraft, combining its software with Grob's ability to design and build aircraft. Buying Grob gave Helsing a shortcut through years of industrial learning.
Anduril has been doing something similar in pieces. Adranos brought rocket propulsion. Blue Force brought aircraft engineering. Klas brought rugged battlefield hardware. Anduril can still develop the system architecture itself while buying specialized industrial knowledge where starting from zero would be slower.
Some defense startups are no longer waiting to be absorbed into the old industrial base. They are assembling industrial bases of their own.
If you want more recent data on this point, please see our latest defense tech market report.
Is private equity buying defense tech too?
Very much so. Private equity currently sits behind a surprisingly large part of defense and government-technology consolidation.
KPMG counted 154 private-equity-backed government-services platforms in its latest sector review. The strategy is often to buy one established government contractor, add several specialized companies, increase the combined platform's scale and eventually sell it to another sponsor or a strategic buyer.
BlueHalo shows how large the outcome can become. Arlington Capital built the company as a national-security platform through repeated acquisitions and later sold it to AeroVironment in the multibillion-dollar transaction discussed earlier. BlueHalo then became the deal that pushed AeroVironment much further beyond drones.
Arlington remains active. It recently created Highwater by combining Australian naval-services company Eptec Defence with U.S.-based AMP United, creating a larger maintenance and sustainment platform for allied navies.
Veritas Capital is pursuing the same basic idea in government technology. It bought MetroStar and recently agreed to acquire Steampunk and combine the two companies.
Private equity competes for defense assets directly while also creating larger companies that can later become acquisition targets themselves.
This chart, included in our defense tech market deck, shows why Anduril is winning in defense tech
Is Europe producing its own defense tech buyers now?
Yes. European defense consolidation is moving quickly now, and the buyer base includes both established industrial groups and relatively young defense companies.
Leonardo completed its €1.7 billion enterprise-value acquisition of Iveco's defense business in 2026, giving it a much larger position in tracked and wheeled military vehicles. Rheinmetall's roughly $950 million acquisition of U.S.-based Loc Performance expanded its American manufacturing footprint and strengthened its position for major U.S. Army vehicle programs.
Helsing represents the newer side of the market. Its Grob acquisition shows that a venture-backed European defense company can become a consolidator rather than simply waiting for Leonardo, Rheinmetall, Thales or another incumbent to buy it.
Capital formation is reinforcing that shift. PitchBook reported that European defense venture activity remained extremely strong in 2026, while its latest work also shows foreign investors still participating in the overwhelming majority of European deal value. The result is a growing population of heavily funded European companies that can afford to stay independent for longer.
Europe will probably produce both outcomes: more acquisitions by established groups and more startups that grow large enough to become buyers themselves.
Does having real Pentagon contracts make a defense startup much easier to buy?
Yes. Repeat defense contracts make a startup considerably more valuable because the acquirer gets both technology and evidence that a government customer will actually use it.
Defense procurement can take years. Products have to survive tests, security requirements, integration work, procurement cycles and budget politics before meaningful production begins. A buyer can skip some of that uncertainty by acquiring a company that already sits inside important programs.
SciTec is a useful example. Before Firefly bought the company, SciTec already generated substantial revenue from national-security customers. Since the acquisition it has continued receiving missile-defense, radar and data-processing work, including the recent Space Force radar-digitization award.
Silvus had systems deployed across military environments before Motorola acquired it. D-Fend had thousands of counter-drone deployments. Edge Autonomy arrived at Redwire with field-proven aircraft rather than an untested drone concept.
One small contract will not transform a startup into an obvious target. Repeat orders, production awards and operational deployments are much more powerful because they show that the customer relationship can survive beyond a demonstration.
This chart, included in our defense tech market deck, shows annual funding in defense tech startups
Is defense manufacturing capacity becoming an acquisition target by itself?
Yes. Production capacity has become strategically valuable enough that buyers are purchasing factories, specialized workers and supply chains alongside the underlying technology.
Rheinmetall made that explicit when it acquired Loc Performance. Loc brought around 1,000 employees and U.S. manufacturing capacity that could support Rheinmetall's push into major Army vehicle programs. The potential competitions highlighted around the transaction were worth tens of billions of dollars.
AeroVironment recently added ESAero, paying about $200 million for engineering and manufacturing capabilities relevant to drones, loitering munitions and other defense systems. Helsing's purchase of Grob gave it aircraft-production expertise. Anduril's Adranos deal added solid-rocket-motor technology at a time when missile-production capacity has become a strategic bottleneck.
The current market is forcing investors and buyers to remember something fairly basic: military demand ultimately has to turn into physical production. A startup that can manufacture a scarce component at scale can be more strategically useful than one with a more fashionable pitch deck.
If you want more recent data on this point, please see our latest defense tech market report.
Why don't the big defense primes just buy every promising startup?
Because buying every promising defense startup would sometimes make the Pentagon's supplier problem worse.
The failed Lockheed Martin acquisition of Aerojet Rocketdyne remains the clearest example. Lockheed wanted to acquire one of the few major U.S. suppliers of missile propulsion, but the Federal Trade Commission challenged the $4.4 billion transaction because competitors could end up relying on Lockheed for a critical input. Lockheed abandoned the deal.
The same logic still affects defense consolidation. Governments want stronger suppliers, but they also want competition. Allowing one prime to own too many important propulsion systems, sensors, autonomous platforms or communications technologies can reduce the Pentagon's choices later.
That helps explain why strategic partnerships often substitute for acquisitions. Lockheed has invested in autonomous maritime company Saildrone and works with it operationally. RTX has partnered with Shield AI around Hivemind autonomy. Large defense groups can gain access to technology without removing an independent supplier from the market.
For some of the strongest startups, independence is useful to the customer as well as to the founders.
This chart, included in our defense tech market deck, compares the main business model options for defense AI contractors
Are huge defense tech valuations making acquisitions harder?
Yes. Defense-tech valuations have risen so quickly that many successful startups are becoming too expensive for ordinary strategic acquisitions.
PitchBook reported a median defense-tech pre-money valuation of about $115 million in 2025, up from roughly $61 million the previous year. More recently, 2026 funding has remained extremely strong, with PitchBook data showing record quarterly investment at points during the year. Major private defense companies are now raising rounds measured in hundreds of millions or billions.
Castelion offers a striking recent example. The missile startup raised more than $1 billion in a new round at a reported $13 billion valuation. At that size, buying the company would require one of the largest defense-tech acquisitions ever rather than an ordinary technology tuck-in.
Higher valuations have two opposite effects. They give startups enough capital to build factories, win contracts and become much more credible companies. They also reduce the number of corporations that can realistically acquire them.
This is one reason the defense-tech market may consolidate from the middle rather than from the top: smaller specialists get acquired, while the strongest venture-backed companies remain independent and start buying those specialists themselves.
Will Anduril, Helsing and the other defense tech unicorns become buyers instead of targets?
For the strongest defense tech unicorns, that is increasingly what is happening.
Anduril already has acquisitions across unmanned aircraft, underwater autonomy, propulsion, sensing, radar and battlefield computing. Its current scale also allows it to pursue very large production programs: it recently secured a U.S. framework covering at least 3,000 surface-launched Barracuda-500M systems over three years.
Helsing has moved from AI software into aircraft manufacturing through Grob. AeroVironment has already completed the transition from specialist supplier to multi-domain consolidator. Firefly is doing something similar in national-security space: after buying SciTec, it acquired autonomous-space software company Space-ng as well.
Fresh funding makes that path easier. The most successful defense startups can now raise enough private capital to buy technology rather than waiting years to develop every missing capability internally.
The old startup path of “raise money, win a defense contract, get bought by a prime” still exists. It is no longer the obvious destination for the companies at the top of the market.
If you want more recent data on this point, please see our latest defense tech market report.
This chart, featured in our defense tech market deck, shows the share of revenue generated by each customer segment in the defense tech market
So who is actually buying defense tech startups today?
Defense tech startups currently have five serious types of buyers: emerging defense-tech consolidators, traditional primes, adjacent industrial companies, private-equity platforms and other well-funded defense startups.
The biggest change is the first category. AeroVironment, Anduril, Redwire and Firefly are building broader businesses through acquisitions. Motorola Solutions has opened another route by spending billions on military communications and counter-drone companies that fit its existing security business. Traditional groups such as Lockheed Martin, Leonardo, Rheinmetall, L3Harris and SAIC remain active, while firms such as Arlington and Veritas keep consolidating assets behind the scenes.
The targets receiving the strongest interest also tell us what buyers want these days. Production capacity, fielded autonomous systems, tactical communications, sensors, propulsion, classified infrastructure, operational software and repeat government contracts keep appearing in the larger transactions.
We would describe today's defense-tech acquisition market as real, growing and highly selective. Funding is still running ahead of exits, and the best-capitalized startups increasingly have enough money to remain independent.
What is changing fastest is who sits on the buyer side of the table. Some of the companies created to challenge the old defense primes are already buying the next generation beneath them. If that continues, today's defense startups will not simply feed the existing defense giants. Several are currently building new ones.
OUR METHODOLOGY
This analysis examines who is actually buying defense tech startups today and whether the buyer base is changing in a meaningful way. Rather than leaning on a few high-profile transactions, we broke the question into separate dimensions: acquisition frequency, buyer type, capabilities acquired, operational maturity, manufacturing capacity, private-equity activity, and the effect of funding and valuations on possible exits.
For acquisition frequency, we built a defined 24-month set of 33 meaningful defense-tech transactions and compared the two adjacent 12-month periods. For the more qualitative questions, we looked for characteristics that repeated across multiple deals, so one unusually large acquisition would not define the whole market.
We prioritized evidence closest to the underlying event: company disclosures and regulatory filings for transactions, government and company records for contracts and deployments, and established market datasets for broader funding, valuation and consolidation trends. Repeat contracts, production awards and operational deployments were treated as stronger evidence of maturity than demonstrations or early-stage technology announcements.
Different evidence was used for different questions. Deal counts were used to test whether acquisitions were becoming more frequent; buyer identity showed whether the market was moving beyond traditional primes; funding and valuation data were used to understand the conditions around exits rather than as substitutes for acquisition data. When those lines of evidence pointed in different directions, we kept the tension instead of forcing a cleaner story.
The final conclusions come from the convergence of those separate lines of evidence. A single acquisition can be exceptional; a pattern that appears across different buyers, technologies and source types is much harder to dismiss. That is particularly important in defense tech, where acquisition activity can strengthen at the same time that private capital is creating larger, better-funded companies that are increasingly able to remain independent.
Key sources used for this analysis include: PitchBook on defense-tech funding and valuation benchmarks, KPMG on private-equity-backed government-technology consolidation, Lockheed Martin on the Ultra Maritime transaction, SAIC on SilverEdge, AeroVironment on BlueHalo, Motorola Solutions on Silvus Technologies, Motorola Solutions on D-Fend Solutions, Redwire on Edge Autonomy, Firefly Aerospace on SciTec, Helsing on Grob Aircraft, Rheinmetall on Loc Performance, and the FTC on the blocked Lockheed Martin-Aerojet Rocketdyne transaction.
This chart, included in our defense tech market deck, shows how tactical networking platform technology has evolved over time
Related blog posts
- Defense Tech M&A: what is happening now?
- What are the top startups in the defense tech market?
- Which companies have raised the most funding in defense tech?
