Family offices bet on defense technology: A new battleground for global billionaires

In the current situation where the global security landscape is being reshaped, defense technology has leaped from the marginal track, which was long regarded as a "sensitive area" in the past, to a core growth pole for global capital revaluation.

Notably, behind this wave of "re - industrialization of defense technology", family offices, the most flexible, patient, and risk - tolerant private capital, are becoming the key force driving the accelerated evolution of the industry.

Family offices in Europe and the United States, especially those in Central and Eastern Europe and the UK, are showing a significantly increased interest in dual - use technologies and defense technology, although most choose not to make public statements.

European and American Billionaires' Capital Flows into Defense Investments

A typical case on the capital side comes from the most powerful private wealth group. Among the private capital flowing into defense technology, the most eye - catching is that the Porsche - Piëch family took the lead in betting on dual - use aerospace and unmanned systems, becoming a typical example of traditional family wealth increasing investment in security technology.

In 2021, the Porsche - Piëch family entered the dual - use aerospace field for the first time, participating in the investment of the German rocket company Isar Aerospace; in 2024, they also entered the field of dual - use drones, taking a stake in Quantum - Systems.

In 2025, the family significantly accelerated its pace: In March, it announced considering a third long - term key investment in the defense and infrastructure fields; in May, it made an additional investment in the Series C of Quantum - Systems; in August, it launched a "Defense Day" and promoted the establishment of a defense investment platform, while discussing the establishment of a defense fund of about 500 million euros with Deutsche Telekom; in November, it further emphasized the long - term potential of security technologies such as satellite monitoring, reconnaissance systems, cyber security, and logistics.

Prima Materia of Daniel Ek, the co - founder of Spotify, bet on the German military AI company Helsing, making it the most highly valued defense technology unicorn in Europe.

Traditional American industrial families have also joined this trend. Take the Michels family in Wisconsin as an example. They have been operating infrastructure contracting businesses for more than 60 years, with a net worth of about $7 billion.

Driven by the family's military tradition and new demands, their private investment department has significantly increased its investment in defense technology in recent years, completing multiple investments in the millions - of - dollars range, covering cutting - edge areas such as autonomous fighter jets and anti - drone systems.

The CIO of this family office said, "We will turn to any end - market that can bring returns." Their first direct investment in defense technology occurred in 2021, when they invested in Shield AI.

Soaring Market Performance

Why is capital flowing in? The market performance provides a clear answer.

Traditional military giants led the rise first. As of early September, the European all - market aerospace and defense index has risen by about 53% this year, far exceeding the 8.3% of the Euro Stoxx 50 index, and continuing the strong revaluation since the Russia - Ukraine conflict.

The US market is also outstanding. The US Aerospace and Defense ETF rose 37.34% from the beginning of the year to November 21, significantly outperforming the broader market.

Europe is one of the most eye - catching regions globally. According to MSCI data, the MSCI Europe Aerospace and Defense Index rose 73% in the past 12 months, far ahead of the 13% of the MSCI Europe Index during the same period.

The broader European defense and aviation sector has risen by about 45% - 70% since the beginning of 2025, much higher than the 20% - 22% of the overall European market. It can be said that defense and aerospace have become one of the most prominent asset classes in Europe.

Venture capital activities have also entered an acceleration phase. In the past decade, defense VC investments of over $10 million per deal have increased five - fold, and the number of transactions has increased eight - fold, reaching a historical peak in 2024: 99 deals with a total of $6.7 billion, among which the most notable was the $1.5 billion Series F financing of the US defense technology artificial intelligence company Anduril. The financing enthusiasm continued in 2025.

The flow of funds is also extending from aerospace companies to a broader range of defense technologies, including unmanned maritime systems (Saronic), autonomous aircraft (Shield AI), directed - energy weapons (Epirus), etc.

According to PitchBook data, in the second quarter of 2025, the financing of defense technology startups exceeded $19 billion, a year - on - year increase of 200%, attracting Silicon Valley and Wall Street to "lean towards defense" comprehensively. Sequoia Capital leading the investment in the German drone company Stark is regarded as a sign that VC has officially included defense technology in the mainstream deep - technology track.

The capital enthusiasm has also promoted the rapid growth of the wealth of relevant entrepreneurs. For example, the wealth of Michal Strnad, the chairman of the Czech defense contractor CSG, has increased by more than 60% this year to $15 billion; the net worth of Christian Hadjiminas, the founder of the Cypriot night - vision equipment company Theon International, has risen to about $1.4 billion, and the company's stock price has increased by 120% this year.

Family Offices: The Earliest Private Investors

European and American family offices and high - net - worth individuals, due to their flexible decision - making and short approval chains, have become the earliest private investment forces in the defense technology sector. Subsequently, the investment spread to multi - family offices and fund - of - funds, and now more institutionalized capital is gradually following up.

Deloitte estimates that the number of European family offices has exceeded 2,000. Among them, family offices in Central and Eastern Europe, the UK, and the United States are particularly active in dual - use technologies, directly investing in startups and also investing in professional defense funds.

Meanwhile, US LPs have also been active in the defense technology field for a long time. Many Silicon Valley giants have continuously invested in autonomous systems, drones, and AI defense companies, further driving industry attention. Now, a capital synergy jointly promoted by "family offices + VC" has been formed in the European and American defense technology track.

If we look deeper, European and American family offices also play an important role in the later stages of defense technology. The reasons behind this include:

Independent and fast decision - making: Without layers of approval, "the decision of the person in charge can be implemented", enabling them to seize early scarce projects.

Low public scrutiny pressure: Not restricted by public pensions or university endowment funds, they can better invest in sensitive tracks such as "dual - use" technologies.

Long - term investment and high tolerance for errors: They can accept deep - technology projects with a cycle of 10 - 15 years or even longer.

Adequate capital scale: At least one - fifth of the world's 500 richest people have family offices, with a total scale of over $4 trillion, providing long - term funds for the industry.

Stronger mission - driven: Especially family offices in Eastern Europe, they attach more importance to "value and asset protection" under the regional security situation.

The new generation of entrepreneurs prefer deep - technology: They are more willing to invest in dual - use technologies such as unmanned systems, AI, satellites, and cyber security, and regard them as industrial hedging tools.

In recent years, some European family offices close to the front line have even started to set up their own defense funds. Some family offices have evolved from LPs to GPs. Multiple family offices have also jointly established "family - office alliance - type GPs" to quickly enter dual - use technologies in the form of hybrid funds. Such teams not only provide capital but also, with their industry resources, policy networks, and cross - border capabilities, are becoming new promoters in the defense technology ecosystem.

Six Challenges

Although the returns of defense technology are remarkable, for private capital, especially European and American family offices, this field is still accompanied by value conflicts, reputation pressure, exit uncertainties, and high professional thresholds.

First, ESG and value conflicts.

Defense has long been regarded as an "off - limit area" for ESG, and many family offices have actively avoided it. However, the trend has reversed in recent years: some European and American family offices have begun to regard defense as part of social responsibility, linking it to national security.

Industry insiders point out that the market is undergoing a structural transformation from "avoidance" to "participation". Some funds have even started to modify their original LPAs (Limited Partnership Agreements) and sustainability clauses that prohibited defense investments, but the overall progress is still slow.

Second, significant reputation risks.

Defense technology investments often face public opinion pressure. The case of Spotify's founder investing in Helsing and then facing artist boycotts and user losses is a typical example.

Family offices vary greatly in their sensitivity to reputation. Some choose to keep a low profile, some are restricted by external institutions, and some are completely unrestricted. Events such as sovereign funds being forced to divest remind investors that defense assets do face reputation pressure, and the exit of private equity assets is more complex.

Third, limited exit paths.

The main exit methods for defense technology are concentrated in mergers and acquisitions by military - industrial groups, equity participation by national funds, and a small number of IPOs. Due to the long military procurement cycle and strict reviews, the industry itself presents a quasi - closed structure with low liquidity. Some family offices therefore prefer projects with existing revenues and stable cash flows rather than early - stage technologies with high uncertainties.

Fourth, long investment cycle and high professional threshold.

It usually takes 10 - 15 years for defense technology to go from R & D to implementation. The technology verification, budget cycle, and compliance processes are far more complex than those of commercial technology. Top - tier institutions usually introduce consultants with military backgrounds or join industry associations to improve their insight and due - diligence quality.

Fifth, policy constraints are loosening but still have boundaries.

Regions such as Northern Europe were the first to relax defense investment restrictions, but most institutions still prohibit investment in sensitive areas such as ammunition and chemical weapons and require more stringent sustainability due - diligence. Although the overall atmosphere is improving, it is still in the "conditional participation" stage.

Sixth, the internal structure of family offices affects investment speed.

Family offices with a single decision - maker can implement investments quickly, while multi - generation or multi - member family offices often have difficulty reaching a consensus on "defense investments". Some Western European family offices are willing to learn, but they are still conservative in the pure military - industrial field.

Overall, defense technology is a deep - technology track with high returns, long cycles, high professionalism, and strong controversy. Family offices can benefit from it, but only if they have patience, discipline, and professional capabilities.

Conclusion

Currently, both GPs and LPs regard "dual - use technologies" as the most consensus - driven investment direction in defense technology. The core reason is that dual - use technologies can enter the commercial market and serve the military at the same time, with clearer exit paths and easier to obtain regulatory and institutional recognition.

Typical tracks include satellites and space, autonomous and unmanned systems, network defense, encrypted communication, AI decision - making software, battlefield management systems, quantum security, and sensors, etc.

However, defense technology is easily magnified by narratives and emotions. The key is not to chase hotspots, but to "focus on the fundamentals like a laser beam": including order and contract backlogs, cash flow and revenue certainty, gross - profit structure, valuation range, policy consistency, and the repurchase and dividend capabilities of mature companies.

However, defense technology is still in the early allocation stage. Although some institutions have started to re - evaluate their positions, the internal communication and compliance review cycles are long, so the release of funds is slower. Even if the interest has increased, different institutions have different ways of entering: some prefer to participate in the form of private equity and are cautious about venture capital, mainly because defense technology requires high professional capabilities of managers and is difficult to screen.

(Reminder from "Family Office New Intelligence Point": The content and views are for reference only and do not constitute any investment advice.)

This article is from the WeChat official account "Family Office New Intelligence Point" (ID: foinsight), author: Foinsight, published by 36Kr with authorization.