War clearly damages economies: capital flees, talent disperses, and investor confidence collapses. But the relationship between conflict and innovation ecosystems is not simply one of damage and recovery. War rewires startup ecosystems — and startup ecosystems, in turn, can rewire the societies that emerge from conflict. How well that second transformation goes depends on the policy choices made during the first.
This dynamic is not confined to a single sector. Across domains such as Energy Security, AI, and Supply Chain Resilience, governments are increasingly seeking faster pathways from innovation to deployment. The pressure to compress timelines is systemic — but it is most visible where the stakes are immediate.
The defense case for startups is clear: just as large corporations came to recognize that partnering with startups — rather than attempting to out-innovate them internally — was a durable source of competitive advantage, militaries have reached an equivalent conclusion. Technological supremacy demands both speed of innovation and harnessing the widest possible pool of emerging technology. Getting new technologies to the frontline faster than an adversary is itself an obvious strategic capability. Defense accelerators like Starburst, NSTXL, DASA, and NATO's DIANA each represent institutional recognition that the path from startup to battlefield must be shortened and systematized.
When startup speed becomes military advantage
Ukraine has demonstrated this vividly. The asymmetric effectiveness of mass-produced, low-cost drones has altered conventional warfare. The lesson is not simply that drones work, but that ‘cheap, fast, and iterative’ beats expensive, slow, and monolithic. That is precisely the mode in which startups operate, and where large, established Defense corporates struggle.
Traditional procurement cycles – measured in years and billions – often cannot operate at the pace that warfare demands; startups, by contrast, can move from prototype to deployment in months or even weeks. For precisely this reason, the Ukrainian government created Brave1 – a program of grants, challenges, investment and acceleration, specifically for DefenseTech startups. Private investors also recognized the potential: our data shows that between 2022 and 2025, seed-stage deals in Kyiv actually doubled in number and tripled in value. The sector as a whole has been one of the fastest growing in the past year.
Global Sub-Sector Lifecycle
Series A Growth Rate (#) (2020-21 vs. 2024-25), Exits Growth Rate (#) (2020-21 vs. 2024-25) and % of Startups Creation (#) (2016 - 2025)
For the purposes of this analysis, we include only startups which specifically mention their defense applications; this clearly omits a number of ‘dual use’ technologies and firms, and so the actual Defense startup sector may be substantially larger.
There are multiple other examples: one of the more famous is U.S.-based manufacturer of advanced autonomous systems, Anduril. Founded in 2017, it became a unicorn in 2019, and last month was reported to have closed a $4 billion round at a valuation of $60 billion. Related sectors like Cybersecurity, Quantum, Advanced Manufacturing, and Robotics also tend to receive more interest as DefenseTech rises.
Ecosystem transformation under pressure
However, the deeper changes occur at the ecosystem level. Talent and capital relocate, and not always in ways that are easily reversed. Diaspora networks form. Transformations that were already underway may be dramatically accelerated – much as the urgency of Covid forced years-worth of digital adoption into a few months.
In the case of Ukraine, several such shifts compressed dramatically: Defense procurement reform became politically urgent overnight, and the State had to radically transform the way it delivered public services. Europe's slow transition away from Russian fossil fuel became an urgent emergency, turbocharging investment in renewables and Energy Security startups. Supply chain reshoring, already a post-Covid priority, gained new urgency as the vulnerability of single-source dependencies became impossible to ignore. And the ESG (Environmental, Social, and Governance) stigma surrounding Defense – which had kept some mainstream investors at arm's length – eroded rapidly.
For those charged with shaping startup policy in regions at risk of conflict, or actively suffering it, three questions deserve attention:
How capable is your existing DefenseTech ecosystem? Particularly with dual-use startups, there is often no clear interface to Defense procurement. The gap between potential and deployable capability is frequently wider than policymakers recognize until the need becomes acute. The path from startup to battlefield also differs materially from the path to market: procurement cycles, liability frameworks, and certification requirements were not designed for rapid deployment — and these friction points are magnified precisely when speed is most critical.
How do you prevent the relocation of capital and talent from becoming permanent? Diaspora networks are a resource, but only if the conditions for return (or at least ongoing connection) — regulatory, financial, and psychological — are deliberately cultivated. The ecosystems that recover fastest from conflict will be those where policy had the foresight to treat the diaspora not as a loss, but as an asset in reserve.
How do you position your broader startup ecosystem to support post-conflict recovery? The rebuilding phase creates urgent societal needs in Infrastructure, Logistics, Health, and Civic Technology — sectors that are typically under-resourced during active conflict but become critical the moment it ends. Startups are often particularly well-placed to contribute here: unburdened by legacy infrastructure or entrenched institutional interests, they can deploy solutions at speed and adapt them iteratively in ways that large contractors or international aid bodies typically cannot.
Ukraine offers several examples: in Defense, Airlogix was a cargo drone startup formed in 2020, which rapidly pivoted wholesale towards Defense applications in 2022; in Logistics, Liki24 — originally an online pharmacy — rapidly reconfigured itself at the onset of war to map open pharmacies and help coordinate medical supply chains; in Fintech, Monobank extended its mobile banking infrastructure to collect and distribute emergency humanitarian payments at a pace and reach that legacy institutions could not match. This adaptive capacity is now extending beyond domestic resilience: Ukraine has begun signing agreements to export and co-produce battlefield-tested Defense technologies, turning wartime innovation into a new channel of economic and strategic influence.
The policy lever: lowering friction before it’s needed
The policy question is not how to direct startups toward recovery – motivated founders will identify the need. It is how to lower the barriers, ensuring that procurement mechanisms are accessible to smaller organizations, that liability frameworks do not exclude newer entrants, and that international reconstruction funding explicitly creates pathways for domestic startups rather than defaulting entirely to established contractors and international NGOs. Channelling recovery investment through local ecosystems also has a compounding benefit: it builds the ecosystem experience that shapes the emerging economy, and sustains long-term economic recovery.
None of this is to suggest that startup policy can undo what conflict destroys; it cannot. But ecosystems that emerge from conflict with stronger procurement pathways, more internationalized talent networks, and a clearer interface between civilian innovation and national resilience will be better placed, economically and strategically, than those consumed by the immediate demands of survival.
For those ecosystems not in conflict, the question is: What reforms can be implemented before urgency forces them? The institutional reforms most needed – in procurement, diaspora policy, and dual-use investment frameworks – are precisely those that feel least urgent when the pressure is absent.
The ecosystems that perform best under pressure are those that prepared before urgency forced them to act. If you are assessing how ready your ecosystem is — across DefenseTech, talent retention, and recovery capacity — let’s have a 30-minute diagnostic conversation. Reach out to Marina Krizman, our Head of Business Development, to explore what this could look like in your ecosystem.