Space Startups Attract US$3 Billion in 2Q25 Amid Defense Boost

Global investment in space startups reached US$3.1 billion in 2Q25, up from US$2 billion in the previous quarter, according to a report by venture capital firm Seraphim Space. The surge is attributed to increased US defense spending and growing investor confidence in national security-related space ventures.

The US$3.1 billion raised makes the April–June period the second-highest quarter for space startup funding on record. Series B and C rounds accounted for 65% of the total capital raised, signaling a strong focus on scaling early-growth companies.

“Given today’s geopolitical climate, the pull from defense is strong, and founders are responding,” said Lucas Bishop, investment analyst, Seraphim Space. He noted that government-led defense initiatives are driving long-term demand for technologies in rocket launches, satellite manufacturing, and in-orbit infrastructure.

The report cited the US Department of Defense’s US$175 billion Golden Dome missile defense program as a key driver of recent investment momentum. The initiative has triggered new deals and partnerships as companies align with defense contracting opportunities.

“More investors now see national security as a viable end market, with government customers offering early adoption pathways, non-dilutive funding, and R&D support—advantages rarely found in commercial markets,” Bishop added.

According to Seraphim Space, the total number of deals globally rose to 171 in Q2, a 36% increase over Q1. The largest transaction of the quarter was US-based Impulse Space’s US$300 million Series C round. The company specializes in in-space transportation vehicles.

Global defense spending rose to US$2.46 trillion in 2024, a 7.4% increase in real terms from US$2.24 trillion in 2023, according to the Military Balance 2025 report. This marks a continued acceleration compared to growth rates of 6.5% in 2023 and 3.5% in 2022. Defense expenditure as a share of global GDP also increased, reaching 1.94% in 2024, up from 1.80% the previous year. 

All regions recorded real-terms growth in military spending, particularly in NATO countries, where inventory gaps and procurement delays  have been exposed by the war in Ukraine and other ongoing conflicts. In Europe, defense spending rose 11.7%, with Germany becoming the fourth-largest global spender and Poland rising to 15th.

According to Fundraiser Insider, defense technology startups that secure early-stage funding face immediate pressure to deliver mission-ready solutions. Fast development cycles and strict procurement deadlines require companies to show operational readiness early in their growth phase. Many are focused on R&D scaling, federal compliance, and prototyping for DoD applications.

Defense tech startups span a wide range of capabilities, including AI and computer vision for threat detection, autonomous aerial and ground systems, military-grade cybersecurity, secure battlefield communications, satellite intelligence, and dual-use robotics.

Among the top-ranked startups are:

• Anduril, building large-scale facilities for mass production of autonomous weapons;

• Shield AI, developing drone swarms and real-time battlefield intelligence;

• Applied Intuition, providing AI software for autonomous systems and space operations;

• Epirus, focused on high-power microwave systems to disable drone swarms;

• Hermeus, advancing hypersonic aircraft for defense and dual-use missions.