97% of UK Defence Firms Plan Major Fundraising Within a Year

Ninety-seven percent of UK defence companies and defence technology start-ups expect to raise substantial external funding over the next 12 months. That figure comes from research commissioned by law firm White & Case and conducted by Censuswide among 250 senior decision-makers at Director level and above across the UK defence and military sector.

The survey, published on 27 October 2026, frames a sector scaling fast to meet rising demand for defence technologies. Companies plan to fund that expansion with more than one instrument.

How do these firms plan to raise the money?

The numbers point to blended financing. Of those surveyed:

• 49% aim to raise equity finance
• 47% aim to raise debt finance
• 39% aim to secure government grants

A divide separates younger ventures from established groups. Start-ups favour equity: 59% plan equity raises, against 49% of established defence companies. Mature businesses lean on debt: 51% plan to raise it, versus 41% of start-ups.

The pattern tracks development stage. Many newer businesses are still building products and remain pre-revenue, while established operators may already hold major government contracts that make borrowing cheaper and easier.

Which investors do defence firms want?

Among companies seeking equity, government-backed investors rank most attractive, cited by 37% of respondents. The rest of the investor mix spreads wide:

• Corporate venture investors: 36%
• Strategic corporate investors: 34%
• Private equity firms: 34%
• Venture capital investors: 30%
• Family offices: 20%
• Sovereign wealth funds: 12%

No single capital source dominates. Defence technology businesses are courting a broad mix of providers rather than betting on one corner of the market.

Does the money come from the UK or abroad?

Overseas interest is growing, but domestic capital still leads. The number of businesses expecting investment from UK sources alone exceeded the total expecting capital from Asia-Pacific, the United States and the Middle East combined.

Tom Clarke, Partner in the Global M&A Practise and Global Private Capital Industry Group at White & Case, said: "While there has been a marked increase in interest among overseas investors, it is no surprise that UK investors remain, for now, the predominant source of expected capital for these companies, with the number of businesses expecting investment from UK sources alone outstripping investment from APAC, the US and the Middle East combined."

He added: "This reflects the UK's unique strengths in matching capital with investments, underpinned by a mature VC ecosystem, deep pools of private capital and ready access to global money markets."

Why is investor appetite shifting now?

The research identifies a wider change in attitudes. Some restrictions that previously held back investment have eased, attracting private capital to a sector many investors now treat as a long-term growth story.

Four factors drive the appeal, according to the findings: higher government spending, more visible contract pipelines, recurring revenues, and the barriers to entry built into defence procurement and specialist technology development.

Geopolitics adds a floor under demand. Governments now emphasise resilience, domestic production and sovereign industrial capacity — factors the report says could support defence technology demand over the longer term. The research also cites dual-use potential: technologies first built for military use may later find civilian applications in larger commercial markets, widening their investor appeal.

What did White & Case say about scaling costs?

Daniel Turgel, Partner and Co-head of White & Case's Global Technology Industry Group, said: "With global military expenditure soaring, defence firms are looking to scale rapidly to meet growing demand for the latest defence technologies. However, scaling defence technology start-ups is expensive, and given their significant capital requirements and high cash burn rates, many earlier-stage firms are likely to undertake successive funding rounds to ensure they have sufficient runway to support growth."

He was blunt about capital supply: "For the most promising businesses, there is no lack of equity financing. A wall of private capital is looking for a home in defence technology as previous investment restrictions are relaxed and investors rush to gain exposure to a highly attractive sector, with long-term structural growth tailwinds that extend beyond current conflicts and even defence itself."

Clarke drew one concrete comparison. The UK's private markets, he noted, have produced more fintech unicorns than any country outside the United States, and he argued they are now poised to repeat that success in defence technology.

His forecast sets the clock: the UK could see significant defence fundraising announcements over the next 12 months.