Drone start-up Helsing targeting an $18bn valuation
The German defence technology company is on course for an $18 billion valuation, making the company one of Europe’s most valuable startups.
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Helsing, a German defence technology company, is on course for an $18 billion valuation, making the company one of Europe’s most valuable startups. The valuation represents a substantial increase for the company from a year ago when it was sitting at a $14 billion valuation.
Helsing develops AI software to analyse battlefield data, and also manufactures kamikaze drones that explode on targets. Additionally, the company has expanded into autonomous underwater vessels and unmanned aircraft, having partnered up with established European defence contractors.
Analysis
The funding round - so how much money Helsing was seeking to expand business operations - was vastly oversubscribed. This demonstrates strong investor enthusiasm for defence technology following a trend of geopolitical tensions. In particular, Helsing has secured a €269 million contract to supply drones to German armed forces, with the potential for additional orders worth over a billion euros.
This is significant because for decades European defence budgets declined following the Cold War’s end as this money was redirected toward social programmes. The Russia-Ukraine invasion shattered this consensus, making European countries realise that they require credible military deterrence.
What does this mean for the defence and technology sector?
- Defence technology investment is shifting from typical large contractors to innovative startups that are developing AI, drones and autonomous systems
- High valuations reveal opportunity but also warn of a bubble that may burst if battlefield limitations are discovered or geopolitical tensions suddenly ease Sovereignty concerns are driving
- European governments to support domestic defence technology despite superior offerings from US firms
How to use this in applications
High-growth defence startups like Helsing will need specialist advice from Venture Capital and Corporate Finance teams at law firms. This will involve advice on funding rounds that balance commercial investor returns against government security requirements. Also, when investors are allowed to buy into the company, law firms will have to help advise the startup on how to preserve founder control of the business and prevent acquisitions by foreign entities that may be blocked on national security grounds.
Regulation teams at law firms in particular will have to advise on the national security angle, as startups operate in highly regulated defence sectors. So this includes government approval of foreign investor participation like noted earlier but also dealing with export controls should the startup choose to export technology abroad. Then internally law firms will have to advise on security clearance requirements for employees accessing classified information.
Partnership agreements with established contractors will require law firm advice as collaboration has to be balanced against competitive risks. When a startup partners with a large incumbent, the incumbent may try to take advantage of the situation so law firms will have to advise strictly on IP ownership and termination scenarios if the relationship deteriorates.
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