For reasons that need no explanation, the European defense sector is attracting more and more investment. Once, in another era, there was a brief moment when investors were interested in going green. Now they prefer camo.
The German defense company Helsing (to oversimplify, it mainly makes AI-enabled drones), which is still privately held (and which I wrote about a month or so ago), has just closed a $1.8 billion new equity financing. This valued the company at $18 billion, a pre-money valuation of 32 times sales, much higher than others in this corner of the defense sector. How investors will fare is anyone’s guess, but the equipment will be built (see the railway bubbles of the 19th century or the internet build-out of the dotcom era).
Helsing has also secured a contract to build a “combat cloud” for the German Air Force. A combat cloud is, as its name suggests, where (to oversimplify wildly) different parts of the military or its machinery can “talk” to each other. But with sophistication comes vulnerability — an EMP attack comes to mind. But if EMP is in the air, Armageddon won’t be far behind.
There are less extreme threats.
Patrick Tucker in Defense One:
As sensors—flying, orbiting, marching—proliferate across the battlefield, and as the military charges ahead with ambitious AI plans to better use that sensed data in combat, the growing reliance on cloud computing makes sense.
But Ukraine’s experience against Russian electronic warfare suggests that cloud architectures are exactly the sort of target high-tech adversaries will come after first.
It’s easy (and grim) to see how Ukraine is becoming the proving ground for warfare’s latest iterations.
Tucker describes how one company, Ditto, is being evaluated by the Marines to see how its technology can be used “for turning radios, cell phones, even drones, into a local network that can keep data flowing and AI tools running locally when cloud access disappears.”
Meanwhile, writing for Bloomberg, Ott Tammik quotes Tomas Jermalavičius, head of studies at the International Centre for Defence and Security think tank in Tallinn, the Estonian capital. He argues that the massive increase in defense spending planned in Europe will not only go to established players, “the primes”:
The way the war has played out in Ukraine has shown the need for rapid innovation of the kind that startups can offer. “You need to make sure you have solutions that are cheap and that can be mass-produced quickly and in a situation where the entire country is a warzone.”
Toward the end of the article. Tammik quotes from a colleague’s conversation with “Ostriv,” an Estonian volunteer in Ukraine’s elite Third Separate Assault Brigade. Ostriv is working as a spy drone operator in Izium, a much fought-over town some way east of Kharkiv, Ukraine’s second city. He describes what is like being deployed in, to use a term I heard frequently used in Ukraine last month, the “kill zone” that drones are creating along and beyond the line of contact between Russian and Ukrainian forces in eastern Ukraine:
On both sides, men mainly spend their days hiding underground. Outside, there’s a constant hum in the air. Surveillance drones patrol the sky, punishing any sign of movement with artillery shelling or FPV drone bombing.
“We need to wake up,” Ostriv said. “Europe’s defense capabilities are catastrophic. Is Estonia ready for thousands of drones falling down on us? You can’t imagine how quickly they will kill you on the battlefield.”
Europe’s defense sector is going to have develop very quickly indeed if it is to be strong enough to deter or, in the worst case, cope with such attacks.