The dual-use dividend has generated a rush of investment into European startups whose technology serves both civilian and military customers. The reason, put simply, is access to a much larger market, greater growth potential, and less dependence on any single user base.
Against that backdrop, a new report examines Europe’s evolving dual-use market, including the growing interest from industrial buyers, the factors shaping acquisition valuations, and the difficulties startups face in turning promising technologies into systems armed forces can depend on.
The Dual-Use Founders Handbook, prepared by venture capital firm Balnord and the Polish Development Fund (PFR), now enters its third edition. The first volume, published in 2024, introduced the fundamentals of building companies serving civilian and military markets, while the follow-up in 2025 examined how those businesses could grow beyond their early stages.
For the 2026 instalment, Building European Champions: Architecture of Resilience, the authors explore what Europe needs to develop internationally competitive dual-use companies, from financing and procurement to industrial capacity and access to customers. Notably, the report brings together contributions from investors, technology companies, defence specialists and policymakers, including representatives of NATO DIANA, the NATO Innovation Fund, MITRE, Invest Europe, and Ukraine’s Brave1.
Balnord, for its part, is a Luxembourg-headquartered venture capital firm founded in 2024, investing in early-stage frontier and dual-use technologies across the Baltic Sea region. The company announced its inaugural tech fund in late 2025, raising €70 million in its first close, going on to raise its maximum of €100 million.
Industrial buyers enter the picture
The report identifies 85 European dual-use acquisitions announced between September 2025 and September 2026. Across the hardware, space, sensing and autonomy sectors, industrial groups entering defence accounted for 19% of transactions. Examples include German engine manufacturer Deutz buying Sobek Group, a specialist in electric motors and drone propulsion; and Norwegian electronics manufacturer Kitron acquiring Swedish electronics supplier DeltaNordic, which already generated half its revenue from defence customers.
Wojciech Drewczyński, head of research at Balnord, expects industrial acquisitions in defence to continue, pointing to NATO allies’ commitment to spend 5% of GDP on defence and related security by 2035. He argues that for listed industrial groups, such deals typically form part of board-approved plans, and that once factories and teams have been brought into the business, they’re not easily unwound.
“For founders that means more potential buyers,” Drewczyński tells Resilience Media. “If you have a proven civilian product with a defence use case, an industrial group can be a real option, and sometimes it’ll pay a strategic price.”
The handbook also examines valuations for established technology businesses serving defence markets. It cites US electronics manufacturer Molex’s recent acquisition of Smiths Interconnect, a British supplier of electronic components for aerospace, defence and other industries, at an enterprise value of €1.5 billion, or 15.1 times EBITDA.
Another example is military equipment manufacturer Theon’s circa-€300 million acquisition of French infrared specialist HGH, whose imaging technologies have civilian and military applications, at a mid-to-high-teens EBITDA multiple.
However, confirmed valuations were available for just 13 of the 85 acquisitions studied, limiting what the data can tell us about the wider market.
“Big deals and listed buyers disclose more often because they’re often required to, which is why we didn’t try to calculate an average multiple for the whole market,” Drewczyński says. “Instead we looked at the deals where the buyer explained the price.”
For founders, this means the cited acquisition multiples aren’t necessarily a benchmark for what they can expect their own companies to fetch. The amount an acquirer is prepared to pay depends on the target’s profit margins and growth prospects, as well as the buyer’s own valuation and strategic priorities.
Building businesses beyond the defence boom
The report comes amid growing investment in companies developing technology for civilian and military applications. Venture capital firm Lakestar this year closed a $300 million defence and dual-use fund, while the European Innovation Council has also expanded its funding programmes to support businesses serving both markets.
Yet the handbook identifies obstacles that investment alone cannot overcome, particularly the difficulty of breaking into defence procurement markets dominated by established suppliers. In Poland, for example, ten contractors accounted for 84% of military procurement between 2020 and 2025. It’s a similar picture in the UK and Germany, where the ten largest suppliers accounted for 77% and 66% of military procurement spending, respectively. By comparison, the equivalent figure in the US was 36%.
Małgorzata Chmielewska, DIANA Accelerator Manager at FORT Kraków, explains in the report that this concentration can leave startups reliant on established defence contractors for access to military customers. Without direct contracts, smaller companies struggle to demonstrate their capabilities, expand production and eventually compete for larger orders.
“Accelerators, investors and grants can prepare companies for that step,” Chmielewska writes. “None of them can substitute for a contract.”
For Marcin P. Kowalik, managing partner at Balnord, the increase in defence spending also presents an opportunity to strengthen Europe’s wider industrial and technological base.
“Europe has a unique opportunity to turn the current defence spending cycle into something much larger than military modernisation,” he tells Resilience Media. “Defence spending should become a catalyst for European reindustrialisation, technological sovereignty and long-term competitiveness.”
Nevertheless, the dual-use model has its critics. In an interview with Resilience Media last year, investor Nicholas Nelson argued that Europe needs companies focused specifically on military requirements.
Aleksander Dobrzyniecki, general partner at Balnord, acknowledges that trying to serve both markets can stretch a young company’s resources.
“Focus remains key, and at the very early stage, when a company is looking for product-market fit, selling to both types of market can be a disadvantage, especially if you are allocating scarce resources between the two,” Dobrzyniecki tells Resilience Media. “Naturally, it all comes down to the specific product and its architecture.”
Still, Dobrzyniecki sees a distinction between the markets a startup should pursue from the outset and those it might eventually be capable of serving. Indeed, the advantages of dual-use could become more compelling over the longer term.
“We see dual use as an operating system and a trajectory, rather than an immediate business model,” Dobrzyniecki adds. “In the longer term, having the opportunity to expand into larger commercial total addressable markets benefits the company and increases the durability of its revenue.”
To access Dual-Use Founders Handbook / VOL. 3 / 2026 in full, click here.
