In a world where geopolitics increasingly drives markets, the defence-tech sector is shifting fast – and it’s quietly becoming one of the most compelling investment frontiers for family offices seeking protection + profit. At Jura Capital we believe this is one of the eras to watch: this blog post outlines why defence tech is no longer a “sin‐stock” niche, what structural tailwinds are underpinning the opportunity, how the risk/return profile stacks up, how private investors can gain access, and how we source and diligence deals (with a UK‐specific angle too).
Why defence tech is no longer “sin stock” territory
A decade ago, defence companies were often seen as mature, low-growth primes dominated by legacy hardware, geopolitical controversy and cyclicality. Today, however, a new crop of “defence tech” firms are rewriting the script-software-defined warfare, autonomous systems, dual-use tech, smaller ticketing, and mixed markets.
Take Anduril Industries: founded in 2017 and born out of Silicon Valley style disruption, it has grown aggressively, reportedly hitting ~US$1 billion revenue in 2024 (up ~138% on ~US$420 m in 2023) and adding US$1.5 billion in contract wins. Sacra+2pminsights.com+2 Its valuation ballooned (~US$30 billion in mid-2025). Axios+1
Meanwhile, venture funding into defence tech across NATO states has surged: in 2025 alone startups in NATO countries have raised ~$9.1 billion and are on track for ~$13.7 billion by year‐end. resiliencemedia.co+1 Europe’s share is rising: Europe reached ~$1.5 billion raised by mid-2025, up from under 1 % pre-2020. Vestbee
Family offices are increasingly stepping in: one recent article notes that “wealthy families have been a key source of capital for defence-related startups” with billions of dollars flowing. Bloomberg+1
What all this shows is changing sentiment. The stigma of defence as “sin” or “moral risk only” is eroding. In today’s world of contested supply chains, proxy wars, and rapid tech‐leap threats (drones, AI, maritime autonomy) the sector is seen as strategic, high-growth and modern.
And for family offices looking for both geopolitical hedge and growth, defence tech offers a narrative that aligns: “I’m worried about the world my grandchildren will inherit — but I want to earn returns, not just avoid loss.”
The structural tailwinds
What makes the case even more compelling are the macro structural drivers. These create an industry-wide tailwind, reducing reliance on one company or one contract.
1. Government spending commitments
- NATO member states are continually urged to hit the 2% of GDP defence spending target; but the momentum is higher. For example, the EU is now exploring a move towards ~5% of GDP by 2035. Oxford Analytica+2Wikipedia+2
- Europe’s rearmament: EU member states spent ~€326 billion on defence in 2024 and are projected to add another €100 billion by 2027. Global X ETFs Europe+1
- The “ReArm Europe/Readiness 2030” initiative: Announced in March 2025, this package may mobilise as much as ~€800 billion for defence and resilience. Oxford Analytica+1
2. Shift from legacy hardware to software-defined, dual‐use & autonomous systems
Modern warfare is not just about big tanks or fighters anymore. It’s about sensors, drones, AI, networks. The value-chain is shifting. For example:
– The European Defence Industry Transformation Roadmap emphasises the need for faster processes, “digital, resilient and scalable industrial base” rather than just procuring traditional platforms. Defence Industry and Space
– The defence-tech VC boom (see above) is being driven by software/hardware convergence, dual-use civilian spin-outs, and commercial tech (AI, autonomy) migrating to the battlefield.
3. Re-balancing of supply chains & alliances
Programs like AUKUS, and partnerships across the UK, US, Australia, Europe – the “pillar 2” of AUKUS emphasises non-nuclear capabilities. Sovereign capabilities, semi-private contracting, and multi-national co-ordination increasingly matter. This enhances the addressable market for defence tech firms and shortens procurement cycles.
4. Low competition & redistribution of risk
The old primes (Lockheed Martin, Northrop Grumman etc) are being challenged by agile tech firms. That opens opportunities for earlier-stage investors at better margins, less herd competition.
Collectively these tailwinds mean the sector is structurally more attractive than perhaps any other traditional “industrial” vertical right now.
Risk-adjusted return profile: why this could deliver 30%+ IRRs
Let’s break down why we believe the risk/return profile in defence tech for private investors stacks up:
Long-duration government contracts with visibility
Many defence-tech companies secure multi-year contracts (8–15 years) with embedded renewals and strong barriers to entry (once integrated, switching costs are high). That means less multiple-compression risk compared to many high-growth consumer tech firms which face churn, freemiums, platform risk and fickle consumer sentiment.
Lower multiple compression risk
While consumer tech valuations can swing wildly on macro sentiment, defence tech is anchored by strategic national priorities (security, sovereignty, alliances). That gives greater downside protection. Moreover, inflation in defence procurement budgets can act as a hedge.
Dual-use spin-outs and exit optionality
Companies in this space often build technology that has civilian spin-outs: e.g., autonomy, sensor networks, AI, maritime robotics. That gives extra exit optionality and broadened investor universe (strategic, aerospace/defence primes, governments, private equity).
Founded investment tickets and under-covered space
Because few advisors in the UK private wealth space are comfortable discussing “defence tech”, competition is relatively low. Tickets of £250 k-£2 m co-investments & secondary positions in 2021-2023 vintages trading at discounts can provide asymmetric upside.
Example return potential
If one invests early into a standout defence-tech firm with contract wins and autonomy to scale, the structural tailwinds plus limited competition mean a 25-40% IRR is well within reach over a 5-7-year horizon. For family offices used to 8-12% fixed income or 10-15% private equity, this is a step-change.
Access routes for private investors
Here’s how a family office or high‐net‐worth investor can gain exposure to the defence-tech opportunity:
Direct co-investments: Doing direct deals at the early/scale-up stage in defence-tech firms (tickets £250k-£2 m) gives the highest upside, optionality and control. Because the space is less crowded, one can negotiate allocation, governance, info rights.
Specialist venture funds: There are funds emerging that focus solely on “defence & resilience tech”. These provide diversification across multiple companies, geographies (US, UK, Europe) and technology streams (autonomy, cyber, sensing, AI).
Secondary positions in 2021-2023 vintage funds: Many earlier-stage defence tech funds or SPVs set up in 2021-23 now have assets or companies that are ripe for secondaries and are trading at discounts given illiquidity. Acquiring at a discount shortens time to liquidity and improves IRR.
Use of UK tax-efficient structures: In the UK, one can invest in qualifying companies via EIS (Enterprise Investment Scheme) or SEIS (Seed EIS) structures, gaining up to 30% upfront tax relief and loss-relief, while backing British technology champions.
