Defence at an inflection point: why now is the time for strategic investment

The defence and security market is being reshaped by three major disruptions. For governments, this means sovereignty risk. For investors, it signals an opportunity to back the companies that will form tomorrow's critical infrastructure. 

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1. New Frontlines: cyber, space & disinformation

Conflict has expanded beyond land, sea, and air. Today, space, cyberspace, and the disinformation domain are contested arenas where adversaries seek to destabilise satellites, cripple institutions, and erode trust through disinformation, fake news, and deepfakes and ultimately undermine democracies.

These aren’t future threats - they’re happening now, from GPS jamming over Eastern Europe to coordinated disinformation campaigns online. The result: the emergence of a new, high-growth defence market segment where dual-use or even omni-use startups will become tomorrow's critical infrastructure providers.

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2. Consumer Tech, Military Impact

Historically, defence programs were costly, complex, and slow; often spanning 5-10 years. But today, the economics have changed. Consumer-grade electronics, AI, and sensors now approach military-level reliability at a fraction of the cost. 

This cost compression allows startups to repurpose commercial tech for defence applications, from drones to resilient satcoms. The opportunity is clear: strategic impact at commercial scale.

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3. ‍Digital Warfare Redefines the Battlespace

As the battlefield becomes digital, it reshapes how wars are fought and how societies are defended. We identify six critical investment areas where dual-use or even omni-use innovation will dominate. 

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Six Critical Areas Shapping the Digital Battlefield

• Data acquisition & intelligence fusion: modern conflicts are increasingly decided by information superiority: who can see first, decide fastest! This requires multi-source, real-time intelligence from satellites, radars, LiDar, and cameras fused by AI and secured with encryption. The ability to acquire, process, and distribute data seamlessly across every domain (land, air, sea, space, cyber) is decisive as tanks or aircrafts once were. For investors, this means demand for new classes of sensors, edge computing, and secure data platforms will grow exponentially.

• Simulation, training & mission preparation: future operations demand near-perfect readiness. AI-driven simulations and VR environments can replicate real-world combat scenarios - everything from equipment handling and logistics planning to full-spectrum battlefield execution. For national security agencies, this cuts preparation cycles and reduces training; for startups, it's a chance to define the next generation of digital twins for warfare, with spillover applications in aviation, logistics, and critical infrastructure.

• Robotics & autonomy: protect soldiers' lives while increasing combat effectiveness is pushing rapid adoption of robotics and autonomous systems. Drones in Ukraine represent just the first wave. Next comes swarming, autonomous ground vehicles, and robotic logistics. Breakthroughs in AI, advanced materials, batteries, and fuel cells are accelerating this transition. Investors entering now can shape the companies that become the future "primes" of robotic warfare, while policymakers secure sovereign access to these critical capabilities. 

• Cybersecurity & cognitive defence: in a hyper-connected world, the lines between civilian and military targets blur. A single attack on critical infrastructure can paralyse a nation without a shot being fired. Meanwhile, disinformation, deepfakes, and fake news erode trust and undermine democracies. Innovation here spans dual-use solutions: offensive and defensive cyber capabilities, resilience platforms for armed forces, and AI-driven systems that detect and neutralise hostile narratives. These solutions will underpin both corporate security and national sovereignty. 

• Manufacturing & supply chain resilience: wars are sustained not by weapons alone but by industrial capacity. The conflicts in Ukraine and the Middle East highlight the enormous strain long campaigns put on supply chains and production ecosystems. To remain competitive, defence industries need agility and resilience. Emerging technologies such as real-time production monitoring, predictive maintenance, additive manufacturing, and multimodal logistics are transforming the military-industrial base. The opportunity for investors is clear: multi-billion-dollar markets in "defence industrial tech" with applications that extend far beyond the battlefield.

• Soldier health & performance: even in an era of automation, the human soldier remains central. Innovations in remote health monitoring, wearable diagnostics, battlefield medicine logistics, stress-preparedness training, and PTSD treatment will be decisive not only for survival but also for sustaining morale and operational effectiveness. Startups working at the intersection of biotech, medtech, and defence can scale into both military and civilian healthcare markets, creating attractive dual-use outcomes. 

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Each of these areas blends military necessity with commercial opportunity, creating dual-use markets primed for growth. 

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Europe's Strategic Imperative

While the US and China scale investments, Europe faces a growing capability and dependency gap. Without investment, Europe risks strategic vulnerability. 

This is why sovereign funds, policymakers, and defence agencies must act in concert with private investors - capital must be mobilised now to accelerate innovation and secure Europe's autonomy in space, defence, and security.

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Why now, and why Karista Tech II

The convergence of new domains of conflict, cost compression, and digitalisation creates the most attractive entry point in decades for strategic investors. 

Karista is raising a dedicated fund to back Europe's dual-use champions in space, defence, and security - ventures that both protect sovereignty and scale globally. 

For investors and sovereign partners, the opportunity is twofold:

• Strategic return: building capabilities that underpin deterrence and sovereignty

• Financial return: backing dual-use / omni-use companies positioned to capture multi-billion-dollar markets

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The next decade will decide the balance of power in space, defence, and security. The question is not wether to act, but how fast.

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The Karista Team