Introduction
Q1 2025 marked a pivotal period for defense tech investing, driven by shifting U.S. administrations, renewed tariff debates, and an intensifying geopolitical backdrop. Against this backdrop, VCs deployed $1.78 billion into 24 deals, a +82.2% jump in capital and +4.35% more transactions versus Q4 2024 – underscoring strong investor conviction in the industry.
Key Takeaways
Money is back: VCs poured $1.78 B into defense tech, the second‑largest quarter by funding we’ve ever tracked — and that’s without a $1 B+ mega‑round.
Concentration is still happening: While there were no billion dollar rounds, Saronic’s $600 million round still represented 33% of all dollars invested.
Late Stage Dominance: Late Stage deals (Series C+) soaked up 71 % of capital (up from just 39% in Q4 2024), powered by Saronic, Shield AI, and Epirus. Seed + Series A/B share fell to 28%.
Broadening deal pipeline: With 24 closings in Q1 2025, deal count is at its highest since tracking began in Q1 2024, highlighting robust activity across stages.
Emerging niches: Pilgrim’s $3.25 million Seed round marks the first Health & Biotech deal in our dataset – and could signal a new frontier for defense applications.
Platform Rule: Platform Systems snagged ~$700 M. Weapon Systems followed with ~$410 M.
The 10 Largest Defense Tech Funding Rounds
While there were no $1 billion+ rounds like we saw in 2024 from Anduril and Scale AI, Q1 2025 still put up some impressive numbers. Saronic’s $600 million raise in February represented more than 33% of all dollars invested in defense tech companies in Q1.
Deal Count and Capital Invested
In Q1 2025, venture capitalists invested $1.77 billion (+82.2% QoQ) into defense tech startups across 24 deals (+4.35% QoQ).
The bulk of both the rounds and amount of funding came in February and March with January being relatively muted by comparison.
Investment By Stage
In Q1 2025, 28% of venture capital was invested in seed and early-stage companies, while 71% went to later-stage companies. The shift from Q4 2024, with a growing portion of capital going to later-stage companies, can be partially explained by Saronic’s $600 million raise, as well as Shield AI’s and Epirus’ $240 million and $250 million respective raises.
Q1 2025 also represented the second-highest quarter of capital investment since Defense Metrics began collecting funding rounds. But removing Anduril’s massive $1.5 billion Series F in Q3 2024 would result in the highest quarter for defense tech funding to date.
Q1 2025 did however have the highest number of deals (24) since we started collecting data in Q1 2024 and marks four consecutive quarters of deal count growth.
Investment by Category
Defense tech companies in the “Platform Systems” category raised the largest share of VC capital in Q1 2025, totaling $667 million. Platform Systems' dominance as a share of total defense tech funding is attributed to Saronic’s $600 million raise.
Removing the Saronic raise from the data would place Platform Systems as the 5th by capital in Q1 2025.
While the “Support & Services” category seems mighty small in comparison to other categories in Q1 2025, we would be remiss not to call out Pilgrim’s $3.25 million Seed round as the first “Health & Biotech” deal categorized in our data.
Zooming out, you’ll also notice that Support & Services – consisting of companies providing logistics and supply chain management, training and simulation, consulting, engineering support, etc. – holds a good portion of weight, especially at the start of 2024. Data also shows that Platform Systems are increasingly taking up more share of VC Capital as time passes.
Investment by Category & Stage
Breaking down capital invested by category and stage gives a clearer picture of what types of companies in each category are raising funds. In broad terms, this blend of data helps us better understand “what’s hot” today in defense tech and “where it’s headed” tomorrow.
In Q1 2025, Platform Systems and Weapon Systems raised $667 million and $410 million, respectively, but those totals came from just 4 deals apiece, skewing toward late rounds.
Zooming out, however, gives us a much better view once again. Looking at all Defense Metrics data from Q1 2024 through Q1 2025, Software & IT is overwhelmingly late‑stage (~70% of its capital), signaling a set of mature, proven businesses. Platform and Weapon Systems, unlike our Q1 snapshot, show more of a balanced mix.
What’s this mean? We’ve all heard the mantra that there needs to be a greater focus on “atoms, not bits.” And now we have data showing that VCs largely agree with that sentiment. Software & IT is the safest, most capital-rich corner of defense technology today – good for later-stage investors or M&A. Hardware‑heavy segments, on the other hand, are showing much more opportunity for growth at all levels.
Together, these charts show where defense tech is (a software-first world) and where it’s going (hardware), with much more room to grow in the Support & Services category considering the lack of late-stage venture rounds.
Thank you to Jake Chapman from Marque Ventures who provided feedback on this report.
