PRESS RELEASE
The ongoing war in Ukraine and strong international interest in innovative solutions in the defence industry are driving the growth of startups operating in the Estonian defence industry. According to investors, the defence industry may become the flagship of the Estonian startup sector in 2026.
Ragnar Sass, an Estonian investor, entrepreneur and founder of the defence organization Darkstar, pointed out that the Estonian startup sector has previously been focused on financial technologies, but since the beginning of the war, attention has turned to the defence industry. “Three years ago, there were only about a dozen defence startups in Estonia, but now we are talking about at least a hundred startups. Innovation created in Estonia is also an international player,” said Sass.
According to Startup Estonia, defence startups are rapidly contributing to the growth of the local startup sector:
In the first three quarters of this year, Milrem Robotics had the largest turnover among defence companies, with the company's turnover exceeding 29 million euros, which increased by 155% compared to the same period a year ago.
Threod Systems, a manufacturer of unmanned aerial vehicles and observation devices used in the military, had a turnover of 28 million euros in the same period.
Defsecintel Solutions, a manufacturer of mobile and autonomous surveillance platforms and artificial intelligence drone countermeasures, also ranked in the top three with a turnover of 23 million euros.
Defendec (14.7 million euros) and KrattWorks (7.9 million euros), which has seen strong growth in turnover, follow.
Sass added that innovation in the defence sector is of critical importance and that the country cannot feel safe with yesterday's technology. "The defence industry must be one step better every day than it was yesterday, and for this reason we created Darkstar to connect people and organizations with the widest possible experience and bring the ability to develop ultra-fast innovation to the defence sector in order to succeed at the international level," explained Sass.
The largest employer among defence industry companies at the end of the third quarter was Milrem, which employs 342 people. The second largest employer is Threod Systems with 187 employees, and Defsecintel Solutions, which employs 110 people, is also in the top three.
Sass noted that the development of the defence industry is also being boosted by the interest of large international investors, who have reviewed their investment strategies. “A few years ago, investing in the defence industry was a red flag for many institutional investors, but times have changed and the defence industry, which was considered a niche field, is today an international trend,” he said.
Of the Estonian defence industry companies, Wayren attracted the largest investment this year, raising 7.9 million euros in April. Lendurai attracted 5.6 million euros in June, including 480 thousand euros contributed by Estonian investors. Frankenburg Technology attracted 4 million euros in March, Defensphere attracted 650 thousand euros in April, and C2Grid attracted 300 thousand euros in September.
Ragnar Sass added that in addition to the publicly known financing transactions, Estonian defence startups have concluded more than five investment transactions that have not been disclosed. “The peculiarity of the defence industry is that not all activities are disclosed and the sector is much larger than we see from the public figures,” he confirmed.
DefenceTech at Estonian Startup Awards 2025
The rapidly developing defence industry has been added to the special categories of the prestigious Estonian Startup Awards this year to highlight and recognize founders operating in the defence sector. There are a total of six special category awards this year, and in addition, outstanding startups in the fields of health technology, deep technology, financial technology and software services will be recognized, and an impact award will also be presented. The annual main categories of the awards are Founder of the Year, Investor of the Year, Newcomer of the Year, Revenue Hack of the Year and the Giving Back Powerhouse of the Year.
Candidates for the Estonian Startup Awards can be submitted by anyone following the developments in the startup sector until December 14. The best of the startup sector will be selected by an independent jury and the award recipients will be announced at a gala on January 22, 2026.
The Estonian Startup Awards are organized each year in collaboartion of LIFT99, Estonian Founders Society and Startup Estonia. The initative is supported by Swedbank, City of Tallinn, Bolt, TalentHub, the Estonian Ministry of Defence, Plural, Specialist VC, and Nordic Ninja, with more to be added.