A Polarion Point of View as of November 5th, 2025
Private Capital as a Catalyst for Security Innovation
This is a crucial moment for European and global security. The pace of innovation is now at the center of strategic discussions, and the rules of the game are changing rapidly. Private capital—and the venture model in particular—can be a powerful catalyst for much-needed change.
However, there is a real risk that Europe may waste this opportunity to make private capital a long-term force for defence innovation, comparable to successful ecosystems in the US and Israel.
From Personal Experience to Paradigm Shift
Allow a personal reflection to set the stage. Years ago, after military service on a submarine and earning an MBA, the temptation was strong to mark the occasion by acquiring an expensive, handcrafted Rolex Submariner—a classic symbol of success and achievement. But for nearly a decade, that watch has remained in a drawer, replaced by an affordable, mass-produced Garmin smartwatch.
This story is not about watches: it is about technology—moving from bespoke, elite objects to high-quality, widely accessible tools empowered by data and insight – mass produced at a far better pricepoint.
This metaphor underscores a fundamental choice in defence investment today. Should nations continue to spend on ‘Rolex’-like systems—expensive, proven, but increasingly outdated—or turn to scalable and «off the shelf» technologies, more like the ‘Garmin’?
The truth is, the old model is simply unsustainable and too costly—not just for acquisition, but for development, procurement, maintenance, and training.
Gamechangers – Dual-Use and Off-the-Shelf Solutions
This is why dual-use technologies and commercial off-the-shelf solutions are rising to prominence. They are not a magic bullet, but when speed, scale, and cost-efficiency matter, they can be transformative.
Space technology illustrates this transformation well. SpaceX, for example, has reduced the cost of putting weight into orbit by 90%, unlocking «New Space», ie creating new possibilities in both civil and defence applications. Starlink is an example, now with 6.000 sattelites in orbit.
The smartphone provides another example of market-driven innovation. The earliest iPhones were expensive, but as Apple perfected scalable procurement excellence, production costs dropped while capabilities soared. This relentless push not only changed consumer technology, but also the economics of connectivity and smart services on a global level – not to mention Apples margins.
Closer to Home: Norway’s Black Hornet
The Black Hornet drone became a dual-use triumph, crafted by an innovator, Petter Muren, with a diverse team from video, microelectronics, and military backgrounds. Muren’s childhood dream of piloting fighter jets turned into a career of invention. After years in R&D at Tandberg, he launched Prox Dynamics, driven by real-world needs in Afghanistan. In 2008, they produced the Black Hornet—a dual-use nano drone, years ahead of its time. The company was eventually acquired and scaled by FLIR and Teledyne—proof of what agile innovators and cross-disciplinary teams can achieve.
Muren is now part of another defence initiative, inspired by Ukraine’s needs, again showing that independent teams can break new ground in security and defence.
At Tiberius Aerospace, silicon valley entrepreneurs bring modern product development pilosophies to reinvent artillery rockets: combining rapid prototyping and “fail fast” mindsets not as buzzwords but as proven accelerants for battlefield transformation. Their associated platform GRAIL, may well be a Kodak moment for the established defence industry.
Innovation on the Battlefield: The Case of Ukraine
Ukraine’s battlefields bring these trends into sharp focus. This is no longer just a war of arms, it’s a contest of innovation and agility. Winning depends on adaptation and deployment speed. Tactical innovations now happen daily, and only teams with the right skills and attitudes plugged into operational units can deliver this kind of constant evolution at speed.
By contrast, public procurement cycles and lengthy planning processes are falling behind. A 5-10-year acquisition plan can become obsolete in the time it takes to approve it.
Why Private Capital Is Pivotal
Here, private investors become pivotal actors. They move faster, accept risks, and can allocate resources to promising ventures without waiting for bureaucratic approval. Venture capitalists and growth investors are accustomed to placing many bets, knowing some will fail—the key is that backing innovation increases the odds of transformational success.
How Europe Can Succeed
Europe, in fact, is well positioned: world-class engineers, operational experience, abundant capital, proximity to conflict zones. The missing ingredient is a culture of speed, collaboration, and collective action. Traditional silos and protectionism are holding the continent back, but there are signs of change. Security leaders are now exploring more collaborative approaches, welcoming entrepreneurs and investors, and building ecosystems that invite both established giants and energetic newcomers.
The Risks: The «Hype» in Defence Tech
There is however real risk in the current trajectory. Almost 60% of VC investments today are going into drones. If Europe’s private capital and ingenuity go “all in” on drones, there is a real danger that the broader opportunity to build a robust innovation ecosystem will be missed — at least in the short term.
As Free Ukraine, a Norwegian NGO points out, this market is now close to its “hype cycle” peak, with as many as 1,800 manufacturers trying to sell drones to Ukraine. At Polarion we argue that much of the investment into drones will be lost in an inevitable shakeout, with a limited number of configurations surviving—and over 1,700 drone companies likely to disappear – taking much private capital and entrepreneurial enthusiasm with them.
We also believe that the ratio of 95+% of drone related investments going into drones, and less than 5% going into drone defence – very soon will be reversed.
A Model for the Future: Polarion and Nordic Innovation
Polarion, a new initiative in the Nordics, reflects how some are working to fill the funding gap for small and mid-sized defence innovators.
Polarion aims to bring investment, expertise, and close partnership to companies in the growth and expansion phases, supporting management, investors, armed forces, and industry networks. The vision is to invest in a subset of defence related technologies and scale-ups across the Nordics, for instance; secure communications, cyber, detection systems, sensors, guidance software, space, ruggedised technology and autonomous robotics and kit suitable for extreme conditions in the Arctic.
Conclusion: Accelerating Innovation with Private Capital
Private capital and entrepreneurship will help accelerate European defence innovation, transform industries, and export solutions well beyond our borders. But a cultural and procedural shift as well as guidance and strategic focus are needed.
Without disciplined, long-term thinking, the surge of private investment will be wasted, and Europe’s chance to build a truly innovative security ecosystem may not come again soon.