Europe’s defense build-up depends on getting partnerships right

The money has arrived. Between January 2025 and June 2026, the FTSE 350 Aerospace & Defence Index rose more than 85%; venture funding into European defense startups reached €7.4 billion ($8.4 billion) in 2025; and the European Union’s €150 billion SAFE loan program now ties major contracts to building at scale, fast, with most components sourced inside the bloc.Europe does not have an idea problem. Its challenge is turning ideas into mass-produced capability, and the joint ventures (JVs) meant to do that too often stall before they deliver.The logic of a JV is sound: pair a fast-moving innovator with an incumbent that has factories, program relationships, and government credibility, and you can field capability faster than either could alone. A JV is often the right structure precisely where a full acquisition is not, whether because of national-security rules, foreign-ownership scrutiny, or a desire to prove the partnership works before committing permanent capital. A JV is not a compromise; it is a deliberate way to solve problems no other structure handles as well.The deals that are progressing show what good looks like: Rheinmetall and ICEYE set up a satellite-manufacturing venture in 2025, and more recently, Helsing and OHB have teamed up to fuse battlefield AI with satellite-building in their KIRK venture. Both are promising because each side brings something the other cannot easily replicate. KIRK itself grew out of an earlier alliance, a reminder that the strongest partnerships tend to deepen over time rather than arrive fully formed.So why do others lose momentum? Two reasons are well understood, and two are easy to miss.Familiar challengesFirst, speed. For an innovator, time is the most valuable asset. Approval cycles that are routine for a large organization can consume an innovator’s cash runway and slow the rapid iteration that modern, software-defined warfare rewards. A venture that moves only at the larger partner’s tempo loses much of its purpose.Sec