Core Insights - The defense technology sector is transitioning from a historically sensitive area to a core growth engine for global capital, driven by private capital, particularly family offices, which are becoming key players in this evolution [1][8] Investment Trends - Notable private wealth groups, such as the Porsche-Piëch family, are significantly investing in dual-use technologies and defense, with investments in companies like Isar Aerospace and Quantum-Systems [2] - The investment activity is not limited to European families; American families, like the Michels family, are also increasing their investments in defense technology, focusing on autonomous aircraft and anti-drone systems [4] Market Performance - The aerospace and defense index in Europe has surged approximately 53% this year, outperforming the European Stoxx 50 index, which rose by 8.3% [5] - In the U.S., the aerospace and defense ETF has increased by 37.34% from the beginning of the year to November 21, significantly outpacing the broader market [5] - The MSCI Europe Aerospace and Defense Index has risen by 73% over the past 12 months, far exceeding the 13% increase of the MSCI Europe Index [5] Venture Capital Activity - Venture capital investments in defense have accelerated, with the number of deals exceeding 99 and total investments reaching $6.7 billion in 2024, marking a fivefold increase in single investments over the past decade [7] - Funding is shifting from aerospace companies to a broader range of defense technologies, including unmanned maritime systems and directed energy weapons [7] Family Offices' Role - Family offices are among the earliest private investors in defense technology due to their flexible decision-making and shorter approval chains, with over 2,000 family offices in Europe actively investing in dual-use technologies [8][10] - These family offices are increasingly forming alliances and funds to invest in defense technology, leveraging their industry resources and networks [10] Challenges in Defense Investment - Despite the attractive returns, private capital faces challenges such as value conflicts, reputation risks, and limited exit strategies in the defense sector [11][12] - The long investment cycles and high professional barriers in defense technology require specialized knowledge and patience from investors [16][18] Future Outlook - Dual-use technologies are viewed as the most promising investment direction in defense, as they can serve both commercial and military markets, providing clearer exit paths [19][20]