Defense tech investment is drawing more private equity funding as firms back younger companies developing military technology. Private equity growth investments in defense reached $4 billion in the first nine months of 2026, compared with $500 million for all of 2024, according to PitchBook data.
Key Takeaways
- The number of defense private equity growth deals rose to 48 through September 2026.
- Advent International says it has deployed roughly three-quarters of its $1 billion commitment to next-generation defense technology.
- Investors disagree over whether valuations signal a potential bubble.
Defense tech investment draws a broader range of backers
The rise in private equity growth deals reflects a shift toward younger companies, an area traditionally associated with venture capital. The 2026 investment figure covers nine months, while the 2024 figure covers a full year.
Venture funding has also increased. Startups across NATO and allied countries raised $27.1 billion through September 2026, nearly double the total for all of 2025, according to an October report from Dealroom and Resilience Media.
Private equity growth investments represented 41% of defense private equity deal value in 2026, up from 3% in 2024, PitchBook data showed. Its lead industrials analyst, Jim Corridore, said private equity was moving into territory previously occupied by venture capital.
| Item | Details |
|---|---|
| 2024 | 15 defense private equity growth deals |
| 2025 | 31 defense private equity growth deals |
| 2026 through September | 48 defense private equity growth deals |
Investors take different approaches to valuations
Advent International announced a commitment of up to $1 billion to next-generation defense technology in March 2026, including investments in autonomous systems developers Shield AI and Saronic. Managing partner Shonnel Malani said the firm had deployed roughly three-quarters of the commitment.
Malani said some defense technology companies were increasingly valued on technological promise rather than revenue, profit or order books. He warned of a significant risk that a bubble could emerge and said Advent had walked away from potential investments because valuations had become too high.
Corridore disagreed that the sector was overheated. Meanwhile, Weinberg Capital Partners partner Lionel Mestre said his firm remained focused on profitable defense businesses with established products, customers and positive cash flow. He said valuations for the smaller suppliers Weinberg targets had not risen significantly.
Funding production and finding exits
As defense technology companies mature, analysts expect private equity, debt and other financing to become more important in helping them expand production beyond what venture capital alone may be able to support.
In a White & Case survey of 250 senior decision-makers at U.K. defense companies, 97% expected their businesses to seek significant external funding over the following 12 months.
Exits remain a challenge for investors. PitchBook recorded 504 defense private equity deals and 101 exits since 2021, although the deal count includes add-on acquisitions and therefore cannot directly show the proportion of investments awaiting an exit. Initial public offerings accounted for 70% of defense private equity exit value through September 2026.
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