When Russia launched its full-scale invasion of Ukraine, the Kremlin believed that the country that it regarded as a sham would collapse within days. A sharp rebuff at Hostomel was an early sign that this was not going to be the case. Now, just over four years later, Ukraine fights determinedly on, with its own resources boosted by Western aid and equipment. And from desperately improvised beginnings, Ukraine is developing increasing amounts of innovative new weaponry itself.
The Council for Foreign Relations (CFR):
Under the pressure of necessity, Ukrainian firms — most privately owned and operating outside legacy state conglomerates — developed new systems for drones, counter-drone operations, electronic warfare, and battlefield command software. Many of those early-to-growth stage companies were initially funded by donations, crowdfunding, and angel investors. They have worked with Ukraine’s Brave1 platform (a government initiative to accelerate the development of defense technologies) for the past four years to finance operations and scale the most promising innovations. In 2025, Brave1 reported that publicly disclosed investment in Ukraine’s defense tech companies rose to over $105 million, up from $1.1 million in 2023.
Ukraine manufactured between 2.5 million and 4 million drones in 2025 and aims to produce around 7 million drones of various types in 2026. Yet potential now outstrips domestic infrastructure and financing, preventing many early-to-growth defense-tech companies from scaling quickly. The limiting factors are not creativity, capacity, or talent, but capital, certification, and integration into European and NATO procurement ecosystems. Ukraine has the engineers and battle-tested products, but it lacks the industrial scaffolding and investment needed to plug into Western supply chains and, until recently, an export market to lock in orders.
This choke point may be easing, partly as the nature of European support for Kyiv expands from helping fund Ukrainian weapons production in Ukraine to financing the production of Ukrainian equipment in countries such as Denmark, a move that, by dispersing production geographically, also makes it more resilient and, in time, could well also make Ukraine a useful contributor to European rearmament, as well as now to European (and not just European) defense. Speeding this process along, Kyiv has been easing its military export restrictions in certain areas. Export “hubs” will now allow Ukrainian systems — especially drones, sensors, and electronic warfare tools — to enter European markets directly.
As Heidi Crebo-Rediker, the author of the CFR report, points out, “Those centers will serve as institutional bridges: legal, regulatory, and commercial nexuses linking Ukrainian firms to EU procurement processes and compliance frameworks.”
Early-stage investment in Ukrainian defense is also attracting international investment. Pitchbook.com is reporting that its data are showing that overall:
Ukraine-linked defense and dual-use companies attracted more than $776 million of venture capital in 2025, a record, and roughly $1.8 billion has been invested since 2022. Ukraine-linked can include companies with Ukraine-based teams, including offices and engineering, even if businesses operate from, or are based, elsewhere.
According to Pitchbook analyst Ali Javaheri:
What’s getting built is pretty intuitive: drones that can still function when signals are jammed, tools that help find and track targets, counter-drone systems, and unmanned boats. What’s significant is the pace. The feedback loop is so tight that products evolve in months, not years, and that’s starting to look like a durable advantage.
Imagine hundreds of drones managed by one operator, complete with fully-autonomous navigation and AI-coordinated swarm operations. What may have sounded like science fiction a couple of years ago is now combat tested and ready to go public.
Helping make this possible is what Swarmer, an early-stage company grown in Ukraine although headquartered in Texas, does. It has filed for an IPO on NASDAQ and is looking to raise around $15m.
The drone industry of which Swarmer is a part is making a vital contribution to keeping Ukraine in the war.
Writing for the Financial Times a week or so ago, former Google CEO Eric Schmidt, who now invests in drone technology, observed how:
Ubiquitous drone coverage — in which almost anything moving on the battlefield, whether soldier or vehicle, is detected and destroyed — means that Russia’s advances remain minimal. It seized less than 1 per cent of Ukrainian territory in 2025. Their slow, grinding assault is carried out in large part by small infiltration units walking or riding motorbikes through forests. The odds of being killed by drones for those who try to advance are about one in three.
In an article published in the New York Times almost exactly a year ago, soldiers were quoted as saying that they were confronted by “a thousand snipers in the sky.”
As of early 2025, it was already estimated that drones, which are manufactured in Russia as well as Ukraine (and elsewhere), were accounting for around 70 percent of casualties in the Russo-Ukrainian war and, as so often in wartime, the pace of innovation has been astonishing.
Swarms guided by AI are just part of that process.
And drones are changing military tactics, strategy, and the balance of forces (on sea, incidentally, as well as land). The Times quotes NATO’s supreme allied commander for transformation, France’s Admiral Pierre Vandier, as saying that the Russo-Ukrainian war “is a mix of World War I and World War III — what could be a future war.”
That, sadly, is all too likely, and terrorists must also be salivating at the thought of the damage they will be able to do with drones.
Meanwhile (via the Daily Telegraph):
A British brigade was “destroyed” in a Nato wargame in Estonia last year, it has emerged.
Hedgehog 2025, a military exercise involving more than 16,000 troops from 12 Nato countries, simulated a battlefield “contested and congested” with a variety of drones, according to the head of Estonia’s unmanned systems unit.
During one scenario, a battle group consisting of thousands of troops, including a British brigade and an Estonian division, was defeated by a simulated enemy operated by a Ukrainian team in a “horrible” result for Nato. . . .
One commander reportedly observed the drill and concluded: “We are f—-d.”