Could a German startup disrupt Europe’s arms industry?
Meet Helsing, Europe’s defence-tech unicorn
Feb 13th 2025
In the 1980s Robert Solow, an economist, remarked that you could see the computer age everywhere except the productivity statistics. Today it could be said that the revolution in military affairs, playing out in the skies, trenches and seas of Ukraine, is visible everywhere except the European defence industry. America boasts three defence-tech “unicorns”, private firms with a valuation of more than $1bn, if you count SpaceX, Elon Musk’s rocket-and-satellite company. In Europe there is one: Germany’s Helsing.
Gundbert Scherf founded Helsing with Torsten Reil and Niklas Köhler in 2021. Back then Europe had “pushed the snooze button” on military preparedness, says Mr Scherf, who is the firm’s co-CEO. Russia’s invasion of Ukraine the following year jolted the continent awake. Last summer Helsing raised €450m ($468m) at a valuation of $5.4bn, making it one of Europe’s most valuable startups.
Mr Scherf, a soft-spoken former management consultant, strikes a contrast with America’s
defence-tech titans. Alex Karp of Palantir, the world’s most valuable defence firm, is a wiry-haired tech evangelist who assails college students over anti-Israel protests. Palmer Luckey of Anduril, another American defence-tech darling, wears Hawaiian shirts and flip-flops and sells 1990s Gameboy emulators as a side project.
Yet Mr Scherf’s firm is no less disruptive than its American cousins. It began life as a software company, putting its code into others’ weapons, and continues to spends huge sums on AI talent and computing power. On February 10th it announced a partnership with Mistral, Europe’s leading maker of AI models.
Recently Helsing has become more involved in building hardware. Its HF-1 strike drones for Ukraine are built in that country by various local manufacturers. Late last year it began making more advanced HX-2 drones at a factory of its own in southern Germany, giving it greater control over supply chains and production.
The war in Ukraine, where the dizzying pace of adaptation on both sides means that weapons can become obsolete in weeks, requires the arms-maker to be nimble. The traditional model of building weapons and sending them to clients is insufficient. Instead, firms are being forced to offer something closer to arms-as-a-service, with engineers visiting the front lines and tweaking code and hardware based on feedback from soldiers.
Helsing has found its niche in the market. Long-range drones or missiles—the distinction is increasingly blurry—which require rocket or jet engines demand serious manufacturing and aeronautical engineering experience that, in Europe at least, remains with the big legacy defence firms. Meanwhile, Ukrainian firms are churning out ultra-low-cost strike and surveillance drones, with simple electronics and ranges in the low tens of kilometres. Helsing is betting instead on weapons with greater autonomy that can strike farther. Its AI-guided HX-2 drone has a 100km range and is expected to cost around $30,000 a unit. That is not going to replace a $1m, 300km-range Storm Shadow cruise missile. But it offers 20 times the range of a Javelin anti-tank missile at a sixth of the price.
That epitomises Mr Scherf’s vision of “precise mass”: intelligent systems that are still cheap enough to produce in big numbers. Helsing believes, for example, that naval drones could persistently monitor the chokepoints between Greenland, Iceland and Britain for one-twentieth of the cost of today’s crewed frigates.
Helsing is not the only company working on such things. Anduril has many similar projects, experience of its own in Ukraine—and deeper pockets. Helsing’s appeal is that it is a European company in the right place at the right time.
European leaders are alarmed by Donald Trump’s threats to allies, including his effort to coerce Denmark to sell Greenland, and the risk that he could walk away from Ukraine and even NATO. Some want to buy more American weapons to placate the president. But many would like to see Europe become less dependent on its increasingly unreliable ally. That could be a big opportunity for European upstarts.
There are two challenges, though. One is inertia in how European defence budgets are allocated. Events like the Munich Security Conference, which was due to begin on February 14th, after we published this, are rammed with sessions on military innovation. But only a tiny fraction of funding flows to defence-tech firms. “Right now, if you look at budget lines, it’s still 99% traditional weapon systems from past procurement efforts that are being pulled through,” laments Mr Scherf.
The other challenge is fragmentation. Whereas America’s defence industry is dominated by too few firms, Europe has the opposite problem, argues Mr Scherf. European states operate 15 different models of tank, for instance. The result is a constellation of sub-scale manufacturers.
Mr Scherf believes that mass-produced, AI-enabled weapons could offer a fresh start; systems like the HX-2 could become “a standard platform across European nations”. Helsing is already pan-European. Although its headquarters are in Berlin, its largest office is in London, where AI talent is more plentiful, and it also has a presence in Paris. It hopes to spread its factories across the continent, making production more resilient to Russian attacks while appealing to Europe’s growing appetite for self-reliance. “One thing we’ve learned from Ukraine”, says Mr Scherf, “is that, when push comes to shove, you don’t want to depend on anyone for weapons.” ■
To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter.
Muista tykätä videosta, kommentoida ajatuksiasi ja tilata kanavamme, jotta pysyt ajan tasalla kaikesta, mitä High Northissa tapahtuu!
podcasts.apple.com
