While established defence contractors and large prime integrators play a crucial role in the UK and European defence sectors, there is a compelling argument for investing in early to mid-stage companies led by UK and European entrepreneurs with crucial military or security experience. These companies are often better positioned to drive innovation, adapt quickly to emerging threats, and provide cutting-edge solutions to complex defence challenges.
A new defence investment report from Heligan Group has identified the key technologies from early to mid-stage companies that are driving UK, European, and NATO capability and therefore the projection of power.
According to Matt Croker, Director, Corporate Finance at Heligan Group, “The UK is well-positioned in a range of defence technologies with both investment as well as the academic institutions underpinning the intellectual property development and talent to remain competitive.”
Emerging defence technologies include:
Artificial Intelligence (AI): The UK Ministry of Defence (MOD) released a dedicated Defence AI Strategy in 2022, aiming to be the “world’s most effective, efficient, trusted and influential” user of military AI. It is being explored for intelligence analysis, decision-support, and operational automation and is coordinated by the Defence AI Centre with AI hubs in all four of the UK’s fighting services (Army, Royal Navy, Royal Air Force, and Special Forces).
Cybersecurity: The National Cyber Force (NCF) is an organisation that brings together personnel from the MOD, Government Communications Headquarters (GCHQ), Secret Intelligence Service (SIS), and the Defence Science & Technology Laboratory (DSTL), established to conduct offensive cyber operations against hostile networks. There is now a greater emphasis on the UK’s ability to fight back and dominate this emerging domain.
Autonomous Systems: The UK is advancing autonomous and uncrewed systems across all domains (air, land, and sea) and is seen as an international leader in this field. Much of this is driven by the Russian invasion of Ukraine and the subsequent transformation of warfare.
Quantum Technology: The UK is leading research in quantum encryption, which is leading to real-world advances in quantum computing for encryption and decryption, as well as unjammable navigation systems.
Space Defence Capabilities: The UK’s Defence Space Strategy emphasises leveraging commercial space innovation and protecting UK interests beyond Earth. Like cyber, this is seen as a new domain that is critical to dominate if the UK and its allies are to maintain capability over adversaries.
“Exact numbers for defence spend in these areas are difficult to ascertain due to the classified nature of defence and national security,” added Croker. “Nevertheless, at Heligan, we have estimated a £279 M spend on AI, £204.6 M on quantum, £837 M on UAS, £1,860 B on cybersecurity and £2,790 B on the space defence sector.
“These technological areas will prove crucial for UK national security and defence in the years and decades to come and will undoubtedly pose significant opportunities for investment growth as the technologies mature,” concluded Croker.
