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Iranian drones are displayed at an event held in an undisclosed location in Iran to deploy new drones to combat units, in a photo released by the Iranian military on January 13 last year (local time). / Reuters, Yonhap News

The Financial Times (FT) reported on July 26 (local time) that the world's largest defense companies are pouring record amounts of investment into military startups this year to adapt to the rapidly changing nature of modern warfare.

According to data firm Dealroom, major defense companies with ties to the West, such as Lockheed Martin and BAE Systems, have participated in venture capital (VC) investments totaling a record $4.1 billion (around 6 trillion won) so far this year.

Gwen Billon, a partner at investment bank PJT who advises on the aerospace and defense sector, analyzed that "recent conflicts have highlighted the need in modern warfare where traditional weapon systems and new disruptive technologies coexist."

She added that "new defense technologies will continue to emerge, and major defense companies want to ensure clear touchpoints with these technologies."

This shift was also clearly evident at the 'Farnborough International Airshow (FIA) 2026' held in London, U.K., from July 20 to 24. Out of a total of 1,636 exhibitors, a record nearly half of the companies belonged to the defense sector.

At this event, potential investors, including major defense equipment corporations, viewed the latest products from defense tech startups and actively sought partnerships.

Governments are emphasizing the need for weapons that can be produced faster and more affordably, from interceptor missiles to autonomous drones, to respond to recent conflicts.

According to financial intelligence firm Dealogic, the total value of global defense-related transactions, including mergers and acquisitions (M&A) and fundraising, has already surpassed $40 billion (around 58.8 trillion won) this year and is expected to break the all-time annual record of $59 billion (around 86.7 trillion won).

Unlike in the past, when major defense companies could focus solely on core equipment markets such as fighter jets, warships, and small arms, FT reported that they must now adapt to thinking like venture capital investors.

French defense tech group Thales plans to acquire maritime robotics and navigation firm 'Exail Technologies' for 3.9 billion euros (around 6.5 trillion won), beating out its domestic rival Safran.

Lockheed Martin recently acquired naval tech group 'Ultra Maritime' from private equity firm Advent for $3.45 billion (around 5.1 trillion won) after competing with Thales and others.

These acquisition battles demonstrate the growing determination of defense giants to strengthen their defense technology portfolios through M&A and large-scale funding investments.

An executive at a leading European defense firm and an aerospace consultant revealed that investors are mainly asking companies about defense technology and the future battlefield landscape, based on lessons learned from conflicts such as the Russia-Ukraine War and the U.S.-Iran War.

They reported that aerial and naval drones, as well as counter-drone systems, are becoming particularly more important on these battlefields.

                                                                                                           Kim Hyun-min