Defense: German startup STARK, backed by Peter Thiel, raises €500 million

Defense: the rearmament race is increasingly playing out in venture capital boardrooms

The German startup Stark, which specializes in attack drones, has just raised €500 million at a valuation of €3.2 billion. Investors include Founders Fund, the fund co-founded by Peter Thiel, Sequoia Capital, the NATO Innovation Fund, Project A, and Döpfner Capital.

This deal comes just months after Stark secured a major contract with the Bundeswehr to supply attack drones to the German armed forces. It also comes at a politically sensitive moment. Facing questions from several German lawmakers about Peter Thiel’s influence, the company took the initiative of sending a letter to the Bundestag clarifying that the American entrepreneur held less than 10% of the capital, had no seat on the supervisory board, and enjoyed no special rights.

But reducing this deal to a controversy over Peter Thiel would miss its real significance. Stark’s fundraising illustrates a much deeper shift: the emergence in Europe of a new generation of defense manufacturers financed using Silicon Valley methods.

The drone as Europe’s new strategic product

The invasion of Ukraine has upended Western military doctrines. Drones, long seen as supplementary systems, have become central pieces of battlefield equipment.

The Ukrainian experience showed that a drone costing a few tens of thousands of euros could neutralize equipment worth millions. It also showed that, beyond technical performance, the ability to produce quickly and at scale had become a decisive strategic factor.

It’s in this context that Stark rose to prominence, with its loitering-munition-type attack drones, capable of identifying a target and then destroying it on impact. Last February, the company was among those selected by Germany to supply this type of equipment to the Bundeswehr as part of a program estimated at around €300 million.

That contract fundamentally changed the company’s trajectory: previously seen as just another tech startup, Stark has since become a credible military supplier in the eyes of international investors.

The funding round announced this week should now allow the company to accelerate its industrial capabilities, strengthen its engineering teams, and support the scale-up of its production capacity. The company already has an industrial presence in the UK and intends to meet fast-growing European demand.

The real parallel: Anduril, not Helsing

The comparison with Helsing often seems natural — both companies are German, both carry high valuations, and both embody the new wave of European defense tech.

Yet their models differ profoundly. Helsing mainly builds software, AI systems, and data-fusion platforms for the armed forces. Stark develops physical weapons systems and the associated industrial capacity.

The more relevant parallel actually lies on the other side of the Atlantic. For several years now, Anduril has been redefining the American defense landscape. The company founded by Palmer Luckey built its growth on an integrated approach combining software, autonomy, AI, sensors, and physical systems. It doesn’t position itself as a mere technology supplier, but as a new defense manufacturer in its own right.

Stark appears to be following a similar trajectory, and the resemblance is all the more striking given that Founders Fund is a major investor in both companies. In both cases, Peter Thiel’s fund is backing companies seeking to compete with legacy manufacturers by building faster innovation cycles and technology architectures natively built around software.

This raises a broader question: are American investors trying to replicate in Europe the transformation they’ve already set in motion in the U.S. defense industry?

The return of the military-industrial complex, venture capital edition

For decades, Europe’s major defense contractors followed a relatively stable model, relying on public contracts, bank financing, bond issuances, or public stock markets. Industrial cycles were measured in decades, and military programs sometimes spanned several technological generations.

Companies like Stark, Helsing, Shield AI, and Anduril are now financed by venture capital funds. They raise hundreds of millions of euros before even reaching the industrial maturity of their traditional counterparts.

This shift also marks the emergence of a new military-industrial complex — one no longer structured around traditional financial markets, but around venture capital’s growth logic.

Investors are no longer just funding technologies; they’re funding the construction of future prime contractors capable of capturing a significant share of Western military budgets.

The phenomenon extends well beyond Europe. In the United States, Founders Fund, Andreessen Horowitz, General Catalyst, and Lux Capital have gradually turned defense into a strategic investment category in its own right. The defense industry has thus become one of the new arenas for global venture capital.

Why Europe still depends on American capital

The controversy over Peter Thiel obscures a more structural reality: if Stark welcomed Founders Fund onto its cap table, it’s also because European alternatives remain limited.

Europe today has a booming defense startup ecosystem, currently fueled by considerable military needs and sharply rising public budgets. What it still lacks are investors capable of single-handedly backing funding rounds worth several hundred million euros.

The United States has long had the market depth that allows funds like Founders Fund or Andreessen Horowitz to quickly deploy several hundred million dollars into a player deemed strategic.

In Europe, that kind of capacity remains rarer — and this is where the paradox should give us pause: European governments are financing the continent’s rearmament, European armies are the customers, the defense-tech startups are European, and yet a significant share of the financial value created continues to benefit American investors.

Some German political figures have taken offense at this grip. But the issue goes beyond Peter Thiel as an individual and touches on Europe’s ability to finance, on its own, the companies it considers strategic.

A sovereignty still under dependency

The debate could soon take on another dimension. In recent years, the United States has demonstrated its ability to use export controls as a tool of industrial and geopolitical policy. Advanced semiconductors, chip manufacturing equipment, and certain AI-related technologies offer several examples of this.

Defense could be affected too: even when a company remains legally European, the presence of American investors, American components, or technologies subject to certain regulations can create forms of indirect dependency.

For now, this question remains largely theoretical in Stark’s case. It could nonetheless become central as Europe tries to define what strategic autonomy really means in the industrial domain — another question facing European policymakers and EU member states.