How to Invest in the Ukrainian Defense Industry: The Routes In

The short version: the most combat-tested defense industry in the world is also the least capitalized. In three years Ukraine went from roughly $1 billion of annual defense production in 2022 to about $35 billion of capacity in 2025, with a projected ~$55 billion in 2026. The capital has not caught up.

In 2025, PitchBook counted about $57.2 million of disclosed private investment across 28 deals — against a “funded market” it put near $6.8 billion. Ukraine's own platform, Brave1, counts more than $105 million once angel rounds and grants are included. Either way, private equity into the sector is a rounding error next to its output.

Government money moved first: roughly $6 billion flowed into Ukrainian production in 2025 through the Danish model and allied procurement. States already buy here. Private capital has barely started — and that is precisely the window.

Different capital comes for different reasons, but each reaches the same wall at the border — and the same structuring solves it.

Family offices & private investors

Direct exposure to the sector early, at family-office speed, with the verification and structuring an institution would demand. They come for access and entry prices before the market is fully found.

Defense & dual-use funds

Thesis-driven capital deploying specifically into defense technology, including pre-revenue. The marquee name is the NATO Innovation Fund — a €1 billion multi-sovereign fund backed by 24 allies, writing initial checks up to €15 million — alongside a growing bench of specialist defense VCs.

Strategic acquirers & primes

Primes and platform companies buying capability proven against a peer adversary — autonomy, jamming resistance, counter-UAS — to fold into their own systems. They come for technology, teams and eventual M&A.

Sovereign & strategic capital

State-backed capital from the Gulf and partner nations, funding defense at scale — larger checks, joint ventures and technology transfer that money alone cannot build at home.

Checks are indicative — disclosed 2025 rounds ran from ~$200–400k early tickets to $2.5–5M at the top (Brave1 data), with fund and sovereign vehicles writing larger. The route decides as much as the number: what you can own, how you exit, and how much of the diligence lands on you.

The route matters as much as the check. These are the five that actually close in Ukrainian defense-tech today.

1. 1Direct equity into a company. A primary or secondary round taken through a cross-border holding the investor can legally own and exit — not the Ukrainian operating entity itself.
2. 2Through a fund. An LP position in a defense or dual-use fund, or co-investment alongside one, for investors who want the sector without sourcing and diligence in-country.
3. 3Strategic partnership or acquisition. A prime or platform company licenses, partners or acquires to absorb a capability and a team — the route with the clearest exit built in.
4. 4Non-dilutive and programs of record. Once a company holds a US-eligible structure and NATO codification, it can pursue programs of record and non-dilutive vehicles — OTA and allied-nation programs (and, through a US-domiciled affiliate, SBIR and STTR) — that pay for technology without taking equity.
5. 5Government-adjacent de-risking. The Danish model and EU joint procurement do not buy equity, but they underwrite demand — de-risking the order book of the company an investor backs.

Before the check size, a foreign committee asks a more basic question: through what does the money flow, and can the position be legally held and exited from abroad. The deal is built in two layers — the vehicle you invest through on your side, and the vehicle you invest intoon the company's side — both set up to sit outside the Ukrainian wartime entity.

On the company side, capital almost never lands directly in the Ukrainian operating company. It enters a cross-border holding — a parent incorporated in a jurisdiction your investors and counsel choose, which owns the Ukrainian OpCo and its IP. That holding is what a foreigner can legally own shares in, and what a strategic buyer or a public market can one day acquire. On your side, the choice is whether to hold that stake directly, through your own SPV, or as a limited partner in a fund that does the holding for you.

The instrument that carries the money into the holding — a priced equity round, a convertible or a SAFE, or a secondary purchase — and the securities framework it closes under are drafted by counsel to the specific deal and jurisdiction, together with how the funds are escrowed and released. Those mechanics are the part you do not improvise; they are where a clean close is won or lost. The cross-border holding explainer walks the topology and the trade-offs in full.

Access is not the hard part. A deal your committee can underwrite — and that can legally close — is. These are the pieces investors expect to see, or expect to be put in place before the money moves.

• A cross-border holding and a clean cap table — IP moved out of the wartime entity, governance that holds up under scrutiny.
• A verified data room — financials brought into order, contracts, IP and a documented combat record, assembled to survive diligence.
• An export path mapped — licensing and NATO codification, so revenue is not capped at a single domestic customer. Export eligibility is where the multiple lives.
• War risk separated and priced — a risk register that isolates company risk from country risk instead of averaging them.
• Battlefield validation — proof the technology works against a real threat, the standard a lab or a range cannot set. It is why independent testing in Ukraine has become a due-diligence input in its own right.

Four doors opened inside eighteen months — each one moves a company from “too early” toward “investable.”

• Exports opened.In 2026 Ukraine launched a controlled export mechanism (the “Drone Deal” framework); officials have said 2026 defense exports could reach several billion dollars. Revenue is no longer capped at one buyer.
• The exit is proven. In March 2026 Swarmer became the first Ukrainian defense-tech company to list on Nasdaq, its shares up more than 500% on debut. An international liquidity event is now on the record.
• Europe is rearming. The EU adopted SAFE — a €150 billion defence-procurement instrument — in May 2025. Ukraine does not draw the loans directly, but its industry can supply into SAFE-funded joint procurement as a (sub)contractor, on member-state terms.
• Institutional capital is arriving — and settling in.US funds MITS Capital and Green Flag Ventures have opened offices in Ukraine, Germany's Quantum Systems took a stake in the drone startup Frontline, and C5 Capital partnered with the Brave1 accelerator — alongside the NATO Innovation Fund and specialist defense VCs. Total defense-tech investment hit ~$129M in 2025, roughly double 2024 and now majority-foreign — the pricing signal private capital was waiting for.

Underneath those doors sits the reason the math works: Ukraine builds at a discount. Production runs an estimated 30–50% below Western Europe, and qualified engineers cost roughly 3–5× less— so a dollar of capital buys more validated capability here than almost anywhere in the alliance. Non-dilutive support stacks on top: Brave1 grants (~$60M to 600+ companies in 2025), the “5–7–9” concessional-loan program, and the Danish model's allied procurement.