Published by Forbes Business Council

Global military spending surged to $2.7 trillion in 2025, growing at more than twice the pace of the prior two decades. The trend is set to continue in 2026 and beyond as governments are seeking technological sovereignty, the ability to design, produce and secure critical defensive and offensive solutions within national and allied ecosystems.

Amid this spending boom, defense tech has become one of the most significant capital magnets in private markets, attracting a wider spectrum of investors, from family offices to private equity to venture funds. Roughly $19 billion flowed into aerospace and defense startups in 2025, nearly double the $10 billion raised in 2024. Sustained demand, high technological barriers to entry and a durable competitive advantage for breakthrough solutions continue to reinforce long-term investment logic.

Defense is also where many decisive deep tech capabilities are tested, hardened and brought to scale. Technologies such as AI, quantum and other domains are increasingly mature in defense environments before transitioning into civilian markets. While defense tech is a strong stand-alone vertical, investors also see it as an entry point into foundational technologies that shape entire industries.

Israel demonstrates how this dynamic plays out in markets. Sustained defense investment and a highly integrated security ecosystem have helped position the country as the fifth most deep-tech focused ecosystem globally. As more governments prioritize defense, similar patterns are emerging elsewhere, elevating the broader deep tech landscape.

Post-Quantum In Cybersecurity And Defense

This defense-driven deep tech momentum is extending to the quantum domain, where the implications are both strategic and security-critical. While many perceive the quantum computing threat to be many years away, security leaders struggle to communicate urgency and gain support for post-quantum initiatives. A post-quantum response is increasingly focused on material business risks, including data breaches, account compromise and communication failures, along with long-term benefits and alignment to strategic objectives.

The frontier in quantum now lies in ultra-fast computing, advanced sensing and secure data transfer. Governments and militaries are increasing investments, recognizing that leadership in quantum translates directly into strategic and economic advantage.

Post-quantum security is becoming an important investment space. Waiting for threats to materialize puts today’s classically encrypted data at risk of breach, and the concept of “harvest now, decrypt later” is already reshaping security strategy and spending priorities. As quantum computing capabilities advance, intercepting fiber-optic communications becomes a major risk, and investors are increasingly backing physics-based solutions to get ahead of these threats. The quantum security market is projected to grow at nearly 45% annually through 2029.

Automation Maturing With Deep Tech Robotics

A new wave of robotics and automation is taking shape across industries as intelligent systems increasingly become embedded in traditional operations. Hardware is re-emerging as a key area of innovation alongside advances in AI across both military and civilian applications. This trend is already visible in capital flows, with deal value in robotics surging over 260% year over year in 2025 and the global robotics market projected at $110 billion by 2030. Energy is emerging as both a constraint and an enabler, as new power sources and storage technologies become foundational to scaling automated physical systems.

This evolution is also reshaping how these companies must be financed. Investing in physical automation differs fundamentally from investing in software. Robotics and advanced manufacturing require larger upfront capital, longer development cycles and closer coordination with industrial and government partners. As a result, investor collaboration is becoming essential, with venture capital increasingly working alongside private equity to support companies through industrialization, deployment and global scale.

Real-Time, Prevention-First Cybersecurity

Cyber remains a strong sector. As an investor in deep tech and cyber, I see the strongest momentum in prevention-first architectures. As AI systems increasingly generate and modify code dynamically, runtime risk is growing rapidly, turning function-level runtime security that prevents malicious code execution before it runs into a significant market opportunity. This market is projected to surpass a $20 billion market.

In parallel, secure service edge adoption is accelerating across cloud, SaaS and hybrid work environments, where agentless, session-level web security is becoming critical to securing the modern workplace without disruption. In the agentic AI era, as autonomous agents begin collaborating inside organizational networks, security must evolve from reactive detection to autonomous prevention. I believe that autonomous platforms that can predict and preempt the most likely attacks to protect critical assets are becoming essential, reflecting a broader shift toward systems that operate continuously and adapt in real time.

This momentum toward real-time, autonomous and prevention-first security builds on a strong 2025, when Israeli cyber companies’ exit reached $72.6 billion, with U.S. investors continuing to play a central role and increasingly engaging earlier in company life cycles. The sector itself is maturing, with larger seed rounds becoming more common and repeated founders building new companies.

The Convergence

Recent challenges in the Middle East have exposed real operational and security gaps, accelerating global demand for the technologies behind military-grade breakthroughs. As a leader at a firm investing in deep tech, cybersecurity and defense technology, I see firsthand how advances proven in high-stakes environments move quickly into large-scale civilian markets. This reinforces a clear investment thesis: Deep tech and defense sit at the intersection of sovereign priorities and commercial markets, shaping scalable companies with long-term strategic relevance.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.