A pattern is emerging among European defence-tech startups looking for sales: plenty of money is up for grabs, but the path to securing a contract remains rocky at best.
In June, Keen Venture Partners published its inaugural guide to Dutch defence procurement, identifying recurring traps including founders engaging without knowing who controls government budgets, mistaking end-user enthusiasm for a buying signal, and leaving the company’s security screening until too late in the process.
The following month, Resilience Media reported on the UK edition, which surfaced a similar problem: pilots, grants and warm introductions can create the appearance of progress without necessarily bringing a startup any closer to procurement.
Now, the Amsterdam- and London-based VC firm has turned its attention to Germany, home to Europe’s biggest defence budget — and arguably its most complicated procurement machine.
Germany allocated €108.2 billion to defence in 2026, comprising €82.69 billion from its regular defence budget and another €25.51 billion from the Bundeswehr special fund.
Keen’s latest report, “Navigating German defence procurement,” maps how that money makes its way from military requirements to purchases, where startups tend to get stuck, and newer routes designed to get younger companies involved earlier.
It paints a picture of a system that still leans heavily toward established defence contractors, where key requirements are opaque to outsiders, even as Germany pushes through major reforms and opens newer entry points such as the Bundeswehr Innovation Centre (InnoZBw), which launched back in February, and the Cyber Innovation Hub (CIHBw).
A legal liability
Perhaps one of the more surprising blockers for defence startups seeking an entry point to government funding comes in the form of liability.
The Bundeswehr –– Germany’s armed forces — buys much of its equipment through BAAINBw, its central procurement agency. Keen’s report says project leaders there carry significant personal accountability for procurement decisions, which can expose them to audits, legal challenges, disciplinary scrutiny and reputational consequences if things go sideways. The authors argue that this encourages officials to favour established suppliers with proven delivery records, over younger companies with less-tested technologies.
“In theory, the [procurement] system encourages risk-taking but fails to protect it institutionally,” the report notes. “Project leaders are told to enable innovation, yet lack the legal tools, safe harbour, and senior-level backing needed to defend experimental procurement decisions when they fail.”
Keen isn’t alone in raising the issue. In a November 2025 submission to the Bundestag, Berlin-based defence company Stark argued that project leaders face an “at least theoretical risk” of personal liability when granting approval for military systems to be used.
Stark said this creates an internal culture in which officials prefer to check things repeatedly to avoid personal exposure, and called for that liability to be limited for newer procurement projects in order to speed up approvals.
Sophia Hommels, a defence-focused VC at Keen who worked on the German procurement report, says she wasn’t aware of this particular finding before the research. And it also might explain why larger, established contractors remain an easier choice for officials making procurement decisions.
“Little funding ends up going to startups versus the primes, because no one wants to take the risk,” she tells Resilience Media.
The liability question feeds into a broader problem the report identifies in terms of traversing Germany’s procurement system: it’s not enough simply to have technology that works. Zooming out, Keen’s report says startups face four core risks on the road from demo to contract, some of which only become apparent when they’re already knee-deep in the procurement process.
Underestimating military-scale deployment
The first of the four identified risks sits partly with founders themselves.
According to the report, the most common failure lies in underestimating what happens once a prototype leaves a more controlled environment. A system destined for the Bundeswehr may need to operate continuously in rain and mud, without reliable infrastructure, while being used by soldiers with limited training. Spare parts, maintenance, software updates and cybersecurity patching all become part of the product too.
“Test your technology in those conditions before you approach the Bundeswehr,” the report advises.
Hommels says that, historically, much of the problem lay with startups arriving too early: founders would show up with something that worked in a lab without fully appreciating what sustained military use would demand of the product and the company behind it. That could be starting to change, however, as newer opportunities allow companies to engage with the Bundeswehr earlier in the process.
“This is still the single most common reason companies stall between demo and contract,” Hommels says. “What’s changed is that founders no longer have to arrive fully formed.”
She points in particular to the InnoZBw, where startups can engage at “concept stage,” demonstrate an idea and get technical feedback before they have a finished product. In Hommels’ view, that should make it easier to identify shortcomings earlier, rather than discovering them only once a company reaches formal procurement.
So in theory, those changes should make it easier for startups to arrive better prepared, though the procurement system around them is still playing catch-up.
“Today, the bigger constraint is the system, and specifically the fact that it’s mid-transition,” Hommels says. “The mechanisms to move budget toward startups now exist but are new and largely untested. Founder readiness will improve quickly as the ecosystem matures; procurement culture moves on a slower clock.”
Getting visibility
A more practical problem identified in the report lies in failing to gain sufficient visibility. Keen argues that companies without the institutional presence of Germany’s established defence suppliers, such as Rheinmetall or Helsing, can struggle to get onto the “slides that matter” to decision-makers.
That creates something of a catch-22 for newcomers. Founders are advised to align their products with formal Bundeswehr capability gaps, yet the underlying “requirements matrix” maintained by Planungsamt der Bundeswehr — the Bundeswehr’s central planning office — isn’t publicly available. Companies already embedded in the defence ecosystem naturally have a head start. The Planungsamt is responsible for bringing together planning requirements from across the armed forces and turning them into Bundeswehr-wide priorities.
There are ways to compensate for all this. Hommels points to talking directly with soldiers and attending events run by InnoZBw, CIHBw and other parts of the defence ecosystem, while public procurement portals can at least show what BAAINBw is currently buying.
Keen also points founders toward NATO’s capability targets — the military capabilities Alliance members are expected to develop and invest in — as a broader indication of where future demand is heading. NATO agreed a new set in June 2025 covering areas including air and missile defence, long-range weapons, logistics and large land formations, though the country-specific targets themselves remain classified
“Does the opacity favour incumbents? To a degree, yes,” Hommels says. “The Planungsamt’s ‘requirements matrix’ isn’t published, and primes sit in rooms startups don’t.”
However, the same institutions that allow founders to engage earlier in the development process are also intended to address some of that access problem. InnoZBw and CIHBw give younger companies routes to military users, testing and decision-makers that would otherwise depend much more heavily on existing defence-industry relationships. The report itself says both can improve a startup’s visibility before a formal requirement emerges.
“The InnoZBw and CIHBw exist precisely to create a second door,” she adds. “And that door is genuinely open.”
Becoming ‘delivery-ready’
Getting noticed by key decision-markers is of limited value if a company can’t fulfil a contract it wins. Indeed, the report notes that many promising defence-tech startups have just a handful of employees, meaning that while they may have the technical ability to build a compelling product, limited resources and supply-chain infrastructure hold them back. The Bundeswehr, meanwhile, needs confidence that a supplier can provide the required quantity at a consistent quality, on time, with the logistics to support it afterwards.
The report puts a concrete ballpark figure on that problem for manufacturers: if a drone company, for example, can’t credibly deliver 1,000 units within 18 months, Keen recommends lining up a larger manufacturing tie-up before pursuing major contracts.
“Getting acquired by, or partnering with, a larger defence firm is often the right strategic move,” the report says.
The status quo pull
Keen says BAAINBw systematically favours established contractors, whose existing production capacity, logistics networks and track records make them far easier procurement decisions. It also estimates that the majority of the regular German defence budget, Einzelplan 14, flows to larger contractors.
For startups, then, partnering with an incumbent as a subcontractor or technology supplier can be one of the most realistic routes into the Bundeswehr. Keen also points to the Innovationspartnerschaft, or Innovation Partnership, a procurement mechanism for capability gaps where no mature product yet exists. Under the model, the Bundeswehr can fund development of a solution and then purchase the resulting product, while the startup retains ownership of the underlying technology.
“Primes are exceptionally good at producing the systems they’ve refined over decades, and that is exactly why they turn outward for novel technology because the in-house specialisation for a new capability often simply isn’t there,” Hommels says. “If you hold something a prime cannot build quickly itself, you have a real negotiating position.”
But that route comes with its own risk. The report warns that a larger contractor can ultimately decide to build the capability itself, leaving the younger company facing long timelines and considerable uncertainty. Hommels says founders should agree issues such as scope, exclusivity and intellectual property early, while continuing to maintain their own relationships with military users.
“If the only people who know your product exists are inside the prime, you’ve handed over your leverage along with your roadmap,” she says.
For Keen, Germany’s reforms — including the 2026 procurement acceleration act, the launch of InnoZBw and an expanded mandate for the Cyber Innovation Hub — should make it considerably easier for young companies to enter the system and prove what they can do. Time will tell if that ultimately translates into a larger share of actual Bundeswehr contracts.
A playbook for outsiders
Collectively, Keen’s recommendations largely come down to engaging with the system earlier: testing products with soldiers before formal procurement, building relationships before requirements turn into tenders, and understanding when newer bodies such as InnoZBw and CIHBw — or partnerships with established contractors — offer a more realistic route in.
Ties Klinkhamer, an associate at Keen who co-wrote the report with Hommels, says that makes the guide particularly useful to founders trying to enter Germany without an existing defence network.
“For a founder that wants to go into [the] German market, the paper makes much more sense than someone in Germany that already has some operational network or expertise,” he tells Resilience Media.
Having already tackled the Netherlands and UK, Klinkhamer says the Germany edition is its most extensive effort yet. He estimates the firm put roughly “10x” the work into it and involved many more reviewers, including founders, people within the Bundeswehr and journalists. Keen says the extra effort reflects feedback from the earlier editions and a clearer sense of what founders actually find useful.
“It’s because we’re learning,” Klinkhamer says.
The series is set to continue with France and Poland next, while Keen’s longer-term ambition is to cover every European NATO country. Those wishing to read the full “Navigating German defence procurement” report can register here.
