DefenseTech superpower Ukraine, the Silicon Valley of the military and defense industry

The transformation of a country into a global innovation hub

In less than three years, Ukraine has evolved from a war-torn country to one of the world's leading defense technology centers. This remarkable transformation is more than just a response to the necessities of war—it represents a fundamental reorientation of the technological landscape, attracting international attention and investment. Already considered a major IT hub in Europe before the war, the country has successfully transferred its technological expertise to the defense sector, creating an ecosystem unparalleled in its speed of innovation and practical application.

The designation "Silicon Valley of the defense industry" is not an exaggeration when one considers the numbers. Since the beginning of the Russian war of aggression, over 500 defense-focused startups have emerged, and production capacities have grown from a modest starting point to an industry that reached over €10 billion in production value in 2024—a tenfold increase compared to 2021. This development is driven by government support, international cooperation, and the urgency of the war situation, which enables a speed of innovation that far exceeds traditional procurement processes.

From IT nation to DefenseTech superpower

The historical foundations

Even before the war, Ukraine boasted one of Europe's strongest IT industries. The sector exported over $6 billion worth of IT services in 2021 and employed 300,000 people. Companies like EPAM, Luxoft, and GlobalLogic employed thousands of engineers in development centers from Kyiv to Kharkiv and Lviv. This technological base, combined with a pool of highly skilled engineers and programmers, formed the foundation for the subsequent transformation into the defense sector.

The strength of Ukraine's IT industry is also reflected in its international recognition. In 2018, 18 Ukrainian technology companies were included in the Global Outsourcing 100 list, and the country emerged as one of Europe's leading outsourcing locations. This expertise in software development, artificial intelligence, and complex systems integration proved to be a perfect foundation for the development of cutting-edge defense technologies.

The transformation into a war industry

With the start of the Russian invasion on February 24, 2022, an unprecedented mobilization of technological resources occurred. Engineers, former soldiers, and software developers began working together to develop drones, ground robots, sensors, and AI platforms. This transformation was motivated not only by patriotism but also by the practical necessity of ensuring the country's survival.

The speed of this transformation is remarkable. Companies like FRDM, which produces kamikaze drones and ground-based robots, emerged from volunteer movements. Tech Force Chairman Vadym Yunyk describes how his initial involvement in aerial reconnaissance in 2014 evolved into a full-fledged defense company that now produces cutting-edge weapons systems.

The Brave1 platform as a catalyst for innovation

Structure and functionality

At the heart of Ukraine's DefenseTech revolution is the Brave1 platform, a government-coordinated initiative uniting all players in the defense technology sector. This platform serves as a central hub for collaboration between DefenseTech companies, security and defense forces, the government, investors, and international partners.

The numbers speak for themselves: Over 3,500 developments have been registered, more than 260 have been codified according to NATO standards, and 470 grants totaling 1.3 billion hryvnia have been awarded. The platform focuses on critical technological solutions, including missiles, anti-Shahed systems, lasers, maritime drones, swarm drones, autonomous attack systems, and guided munitions.

International testing platform

A particularly innovative aspect of Brave1 is the "Test in Ukraine" platform, which offers international companies the opportunity to test their technologies under real combat conditions. This platform provides foreign companies with expertise and feedback from the military, fully equipped test sites, and contacts with Ukrainian manufacturers for joint production.

This unique test environment has already attracted international attention. German companies like Diehl Defence are testing their robotic systems, such as the Ziesel, via Brave1 at the 3rd Assault Brigade's training center. Such tests under real combat conditions provide insights that cannot be obtained in any laboratory or simulator.

Technological breakthroughs and innovations

Drone technology as a paradigm shift

The Ukrainian drone industry has established itself as a spearhead of military innovation. The country now produces a wide range of drones, from simple disposable models to reconnaissance drones to kamikaze drones with ranges of several hundred kilometers. Particularly noteworthy is the development of drones controlled by fiber optic cables—a technology that makes them largely immune to electronic jamming systems.

Drone production figures are impressive. The domestic defense industry has the capacity to produce approximately 4.5 million drones by 2025, and the Ministry of Defense plans to purchase them all. More than €2.4 billion is available for this purpose. Companies like Skyassist produce around 1,000 SIRKO 2 drones per month. With their small size of just 1.3 kg and a range of 45 km, they are virtually invisible to enemy radar systems.

Intelligent weapon systems and networking

The innovation isn't limited to drones. With its Hydra system, the startup ZMIYAR has transformed the classic minefield into a controllable network of sensors and effectors. These "smart mines" form a self-healing MESH network that can integrate up to 250 mines and features GPS mapping with real-time updates and secure encryption.

Another example of technological superiority is the development of interceptor drones. Over 200 confirmed cases show how Ukrainian drones have intercepted Iranian Shahed drones in mid-air. The company 3DTech is testing reusable interceptor drones called Predator Shooter, equipped with a six-barreled 12-gauge cannon.

Long-range weapons and strategic systems

Ukraine has also made significant progress in developing long-range weapons. Fire Point unveiled the Flamingo, a Ukrainian cruise missile costing less than a million dollars and described as the world's largest in terms of payload and range. At the same time, production of modified Neptune cruise missiles for land targets has been ramped up, and these now achieve ranges of up to 1,000 kilometers.

International cooperation and investments

The BraveTech EU initiative

One of the most significant developments is the BraveTech EU initiative, a €100 million partnership between Ukraine and the European Union. Announced in Rome in July 2025, this initiative is the first major technology alliance between Ukraine and Europe on a level playing field, with each side investing €50 million.

The program focuses on small and medium-sized enterprises and startups in both Ukraine and Europe. Within the alliance, both sides will share regulatory experience, develop innovations, and procure new defense technologies. The first hackathons are scheduled to begin in fall 2025, with grant funding for implementation starting in 2026.

Private investments and venture capital

Investments in Ukrainian defense technology have increased dramatically. At the Defense Tech Valley 2025 in Lviv, four companies from Europe and the US committed to investments of over $100 million. NUNC Capital from the Netherlands pledged $23.5 million for new materials, while Verne Capital plans to invest up to €25 million in Ukrainian defense startups in cybersecurity and military communications.

These investments demonstrate the growing confidence of international investors in Ukrainian defense technology. Drone swarm software company Swarmer secured $15 million in a Series A funding round from US investors, while Teletactica received $1.5 million to develop EW-resistant communications systems.

European industrial partnerships

Germany plays a particularly important role in cooperation with the Ukrainian defense industry. Defense Minister Boris Pistorius announced an additional €1.9 billion for long-range weapons systems to be produced in Ukraine. This cooperation combines German funding with Ukrainian technologies developed through wartime experience.

Daimler Trucks has ordered around 1,000 Mercedes-Benz Zetros vehicles for the Ukrainian armed forces. These robust vehicles have been specially adapted for modern drone warfare, focusing on speed, maneuverability, and minimal visibility. Production is scheduled to begin between 2026 and 2029 at the Daimler plant in Wörth.

The hub for security and defense offers well-founded advice and current information in order to effectively support companies and organizations in strengthening their role in European security and defense policy. In close connection to the SME Connect working group, he promotes small and medium -sized companies (SMEs) in particular that want to further expand their innovative strength and competitiveness in the field of defense. As a central point of contact, the hub creates a decisive bridge between SME and European defense strategy.

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Production capacities and economic impacts

Massive increase in arms production

The Ukrainian government plans record investments of €16 billion in arms production and procurement for 2025. This corresponds to approximately 38 percent of the state budget and 20 times the pre-war level. Production value increased tenfold to over €10 billion in 2024 compared to the pre-war year of 2021, and forecasts predict a further tripling for 2025.

Nevertheless, capacity utilization is only around 40 percent. The reasons for this are inadequate protection of production facilities and a lack of financing. This demonstrates both the enormous potential and the challenges facing the Ukrainian defense industry.

Employment growth and skilled workers

The arms industry now employs a good 300,000 people, and the number is growing. More than 500 arms manufacturers are active, of which approximately 100 are state-owned and 700 are privately owned. Around 60 of the private manufacturers have joined forces to form the "Tech Force" union.

A fundamental problem, however, is the conflict between the need for mobilization for the front and the increased demand for labor for production. According to the business newspaper Economichna Pravda, there is a particular shortage of engineers, which is delaying development work on weapons systems.

Export potential and international markets

Interestingly, the Ukrainian arms industry is pushing for the right to export some of its weapons. Industry leaders argue that selling weapons abroad would not harm the war effort, but rather help it, as efficient mass production could mean lower costs. The Ukrainian government sees unused capacity in its own arms industry totaling €30 billion annually.

Technology transfer and learning effects

Experience under real combat conditions

A unique advantage of the Ukrainian defense industry is the ability to test and improve technologies under real combat conditions. This has led to a development speed that would be unthinkable in peacetime. It often takes only three months from the initial concrete planning of an idea to deployment on the battlefield.

This direct connection between frontline needs and innovation has enabled Ukraine to advance faster than larger, better-funded systems in NATO countries. NATO Innovation Fund representatives emphasize that their mission is not charity, but learning and scaling.

Lessons for Western armed forces

The technological backwardness of traditional Western armed forces becomes abundantly clear when compared to the daily lives of Ukrainian soldiers. While lengthy procurement processes and outdated order lists hamper development in Germany, Ukrainian soldiers are provided with 3D printers to put their ideas into practice.

A system like the SIRKO 2 drone would likely not have received approval in Germany, but it has been successfully serving on the front lines for over three years. If 80 percent of the systems function as intended, that's sufficient—an approach that enables mass production and uses simpler components.

Challenges and limitations

Infrastructure and protection of production facilities

The infrastructure of the production facilities is a latent weak point due to Russian airstrikes. New construction is not feasible, which is why companies like Rheinmetall are moving to existing plants. Since the beginning of the war, Ukrainian arms companies have partially relocated their production abroad, splitting up, and duplicating operations to keep production running. While this makes the armaments more resilient, it also complicates their expansion.

Dependence on imported components

A key weakness of the Ukrainian drone industry is its high dependence on imported components. Currently, only about 40 percent of the required components are manufactured locally – especially motors, batteries, and flight controllers, which predominantly come from China. Beijing's ambiguous stance on the Russian war of aggression and export restrictions are forcing Ukraine to significantly expand its domestic production of critical components.

Financing bottlenecks

Despite the impressive figures, capacity utilization is only around 40 percent. The biggest obstacle is limited government demand due to tight budgets. Orders only cover the next three months, making long-term planning and investment difficult.

International competitiveness and future prospects

Comparison with established arms nations

In just a few years, Ukraine has reached a level of capability that impresses established defense nations. The recent Ukrainian Operation "Spiderweb"—a precisely coordinated drone attack on Russian air bases—resulted in the destruction of 34 percent of Russian bombers and caused $7 billion in damage.

This efficiency is also reflected in the cost structure. Ukrainian developments can often achieve the same or better results at a fraction of the cost of traditional weapons systems. A Ukrainian cruise missile costs less than a million dollars, while comparable Western systems cost many times more.

Potential for the European defense industry

Cooperation between Ukraine and European partners could change the way Europe organizes its defense. Dutch Defence Industry Commissioner Jan Christiaan Dicke emphasizes that cooperation with Ukraine is critical for revitalizing the European defence industry.

The Ukrainian defense industry demonstrates incredible resilience and innovative strength. An important step is to combine Ukrainian solutions with production capacities in Europe. This could lead to increased competition and faster adoption of new technologies in other countries.

Long-term development prospects

Ukraine is positioning itself not only as a defense partner, but as a co-architect in Europe's preparation for future wars. The country has unique experience and is willing to share it. Its expertise in modern warfare, combined with its speed of innovation, makes Ukraine an indispensable partner for the Western defense community.

This development goes beyond mere weapons production. Ukraine is becoming a center for the entire spectrum of modern defense technologies, from cybersecurity to artificial intelligence and autonomous systems. This diversification strengthens the country's position as a leading player in the global defense landscape.

Social and cultural transformation

From the volunteer movement to industry

The transformation of the Ukrainian defense industry is also a story of social mobilization. What began as a volunteer movement has evolved into a professional industry. This development demonstrates how social cohesion and technological expertise can combine to form a powerful force.

The integration of military personnel, engineers, and entrepreneurs into a shared ecosystem has led to a unique climate of innovation. Soldiers provide direct feedback on developments, engineers implement this feedback, and entrepreneurs scale the solutions—a cycle that would be unthinkable in traditional procurement systems.

Digital infrastructure as a basis

Ukraine's already strong pre-war digital infrastructure plays a crucial role. The Diia app, used by more than 70 percent of the adult population, demonstrates the country's digital literacy. This digital penetration facilitates the rapid implementation of new technologies and coordination between different stakeholders.

The understanding of digital solutions and the willingness to adopt new technologies have significantly facilitated the transition from civilian IT to military technology. Ukraine had already proven its ability to overcome complex technological challenges before the war.

Ukraine has transformed at an impressive pace from a war-torn country into one of the world's leading defense technology centers. This transformation is based on a unique combination of technological expertise, wartime necessity, international support, and social cohesion. The designation as the Silicon Valley of the defense industry is not just a metaphor, but reflects a real shift in the global innovation landscape.

Ukraine's successes in defense technology offer important lessons for other nations and the international defense community. The speed of innovation, the efficiency of development processes, and the cost-effectiveness of Ukrainian solutions challenge traditional procurement models. At the same time, international cooperation, especially with European partners, demonstrates how wartime necessities can lead to lasting technological partnerships.

The challenges—from infrastructure problems to skilled labor shortages to funding bottlenecks—are real and significant. Nevertheless, Ukraine has proven that, under the right circumstances, unprecedented innovation speed is possible. The question is not whether Ukraine can maintain its position as a leading defense technology center, but how other nations can learn from these experiences and create similar innovation dynamics.

For Europe, the partnership with Ukraine represents an opportunity to revitalize its own defense industry while benefiting from battle-tested innovations. The BraveTech EU initiative and other cooperation projects point the way to a stronger, more innovative, and more efficient European defense community. Ukraine has proven that it is not only a defense partner but also a catalyst for technological innovation, significantly shaping the future of modern warfare and defense technology.

I would be happy to serve as your personal advisor.

Head of Business Development

Chairman SME Connect Defense Working Group

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I would be happy to serve as your personal advisor.

contact me under Wolfenstein ∂ Xpert.digital

call me under +49 89 674 804 (Munich)

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