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Defence tech start-up Helsing raises funds at €1.5bn valuation from Saab

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European defence technology start-up Helsing has raised €209mn to develop its software that is used to support militaries across Europe, in the latest example of how the sector is defying the venture capital downturn amid the Ukraine war and rising tensions between China and the west.

US venture capital firm General Catalyst led the deal with participation from Swedish defence group Saab. It reflects increased investor interest in the defence tech sector after many had shied away from it in recent years.

Saab said that it was paying €75mn for a 5 per cent stake in Helsing.

That would imply a valuation of €1.5bn for Munich-based Helsing, before including any new funds raised. Company executives declined to comment on the valuation.

Founded in 2021, Helsing uses artificial intelligence to process vast amounts of data and analyse that information rapidly to create real-time pictures of battlefields and help militaries in their decision making.

The company has previously received financing from Spotify co-founder Daniel Ek’s investment company, Prima Materia, which backed Helsing in 2021 with €100mn at a valuation of just over €400mn

Helsing’s 220 employees work across offices in London, Paris, and Berlin in addition to Munich.

Saab’s investment includes an agreement with Helsing to co-operate on electronic warfare and surveillance capabilities for fighter aircraft as well as other sensors, the Swedish company said.

The group’s latest funding comes as the Ukraine conflict has focused attention not just on hardware such as tanks and ammunition, but also proven to be a showcase for innovative technologies such as sensors, robotics and unmanned systems. Some of these have been developed by smaller, technology-led companies.

In December, US-based defence technology start-up Anduril raised nearly $1.5bn in a deal valuing the company at $7bn, excluding the new cash it raised, in one of the biggest venture capital rounds of the year.

The success of the newer players’ equipment on the battlefield has highlighted the challenges defence industry incumbents face to keep up with the rapid advances offered by more agile technology companies. 

“We felt there was a big capability gap because defence was clearly becoming a software problem,” said Torsten Reil, Helsing’s co-chief executive. “But the companies in the space are largely hardware companies and it is very difficult for hardware companies to make cutting-edge software.”

Robert Stallard, analyst at Vertical Research Partners, said the problem was not so much the defence industry but the structure of government defence departments.

“Governments are just not geared up to develop and procure stuff faster, or to pay industry the sort of returns that you can get in the commercial world. Just compare Apple’s margin to Lockheed Martin’s,” he said.

The war in Ukraine and geopolitical tensions with China have led US venture capitalists in particular to boost their bets on defence technology. US VCs agreed more than 200 defence and aerospace deals in the first five months of this year, worth nearly $17bn — more than the sector raised during the whole of 2019, according to data from PitchBook.

Helsing’s support to Ukraine includes deploying personnel to the country, company executives said.

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