Helsing, a Munich-based defense tech startup valued at over €5 billion (US$5.48 billion), is under scrutiny for its high-priced drones and concerns about software performance.

Founded in 2021, its attack drones have been used in Ukraine since Russia’s invasion in 2022. Soldiers and experts have criticized the drones’ targeting system as “very primitive.”

Helsing responded that its tech evolves with battlefield needs but stressed the importance of confidentiality for security.

The company has faced partnership issues, with its collaboration with Rheinmetall AG ending in 2024 before reaching technical development.

Still, Helsing claims ongoing partnerships with Saab and others. It recently secured a €40 million (US$43.88 million) contract to strengthen Lithuania’s border security and is involved in Germany’s Eurofighter program.

The firm employs over 400 people and positions itself as a key player in software-defined military solutions.

🔗 Source: Bloomberg

🧠 Food for thought

A. New defense tech startups face battlefield reality checks despite investor enthusiasm

Helsing’s experience mirrors a pattern seen with other defense technology startups that attract substantial funding but face criticism when their products reach actual combat zones.

The company secured a €450 million investment at a valuation of nearly €5 billion despite being founded just four years ago in 20211, demonstrating exceptional investor confidence in AI defense applications.

However, frontline feedback from Ukraine, where a soldier described Helsing’s drone targeting system as “very primitive,” highlights the persistent gap between technological promises and battlefield realities2.

This pattern extends beyond Helsing to the broader defense tech sector, where new entrants often struggle to transform theoretical capabilities into effective combat solutions that satisfy military end-users.

The tension between valuation and performance reflects historical challenges in military technology transfer, where innovations typically require extensive field testing and iteration before achieving their promised effectiveness3.

Helsing’s simultaneous scaling of production (manufacturing over 1,000 HX-2 units monthly) while addressing performance critiques demonstrates the challenging balance between rapid deployment and combat-ready systems4.

B. Defense tech ecosystem reveals complex relationships between startups and traditional contractors