The ongoing conflict in Ukraine and former U.S. President Donald Trump’s past ambivalence toward supporting NATO allies have created a substantial shift toward increased investment in European defense technology. Amid this backdrop of elevated spending and expanded strategic ambitions, startups across Europe are swiftly positioning themselves to capitalize on new opportunities.
One emerging player is Vertical Aerospace, a UK-based startup initially known for developing electric vertical takeoff and landing (eVTOL) aircraft, primarily targeted at air taxi operations. Vertical has gained significant traction, securing over 1,500 pre-orders for its VX4 model from prominent customers such as American Airlines, Japan Airlines, GOL, and Bristow.
Recognizing a unique window of opportunity in defense and logistics, Vertical Aerospace recently took a decisive public step, announcing its intention to produce a new hybrid-electric variant of its VX4 aircraft. The hybrid model is expected to offer up to 1,000 miles of flight range—marking a striking ten-fold improvement over its purely electric predecessor.
Vertical CEO Stuart Simpson emphasized the natural fit between the company’s aircraft design and military requirements. The eVTOL structure provides inherent advantages, including minimal heat and noise signatures—crucial factors for defense deployments. Furthermore, Vertical anticipates integrating autonomous or remotely operated capabilities into future versions through collaboration with industry partners such as Honeywell, a renowned supplier of autonomous flight control and management systems to the U.S. military.
Vertical Aerospace is not alone in pursuing hybrid defense capabilities. Archer Aviation, a California-based competitor, previously announced a defensive-focused partnership with Anduril Industries last December, subsequently raising $430 million in additional investment. However, according to Simpson, Vertical’s design decision isn’t merely opportunistic; the company quietly worked on hybrid-electric integration for over 18 months prior to this announcement.
Europe’s defense tech investment landscape has indeed been transformed, propelled by geopolitical tensions. Last year saw an unprecedented influx of venture capital investment—approximately $1 billion flowed into European defense technology startups. Notably, dedicated defense tech funds, such as the €1 billion NATO Innovation Fund and the €100 million Estonian SmartCap Defense Fund, emerged. Even smaller European nations like Lithuania are substantially ramping up their defense tech funding through state-sponsored venture initiatives, further emphasizing the gravity given to regional defense self-reliance.
With significant competitors like Germany’s Volocopter and Lilium now either bankrupt or having ceased operations altogether, Vertical Aerospace finds itself comfortably positioned as Europe’s foremost viable supplier of eVTOL platforms for defense purposes. This unique circumstance places the startup at a strategic advantage, enabling it to potentially carve out a substantial market segment amid growing defense budgets and an intensified focus on local technological resilience.
However, Vertical’s ambitious goals will necessitate additional financial backing. Having raised around $469 million thus far—including the proceeds obtained from its reverse merger and PIPE transactions—Vertical trails significantly behind competitors such as Joby Aviation, Archer Aviation, and Beta Technologies, each of which has crossed the billion-dollar fundraising threshold.
Simpson acknowledges the disparity but underscores Vertical’s disciplined, conservative approach to capital expenditure. The company maintains a lean budget of approximately $100 million annually—only a fraction of the $400 to $500 million routinely spent by rivals. For example, Archer’s 2024 budget exceeded $500 million, while Joby’s approached $600 million. Unlike these companies, Vertical has deliberately avoided heavy upfront investments in extensive robotics and early-stage mass-manufacturing equipment, opting instead to refine its processes and simplify designs prior to scaling production operations.
Vertical plans to complete certification for its aircraft by 2028, with preliminary hybrid-electric flight testing scheduled to begin next year on its next-generation VX4 prototype. Although the company is yet to secure official defense contracts, Simpson indicated productive conversations are ongoing with several potential governmental entities and highlighted Vertical’s notably advantageous position in an otherwise sparse European field.
For now, Vertical Aerospace remains singularly focused on leveraging its strategic advantage. The startup expects to launch its certified pre-prototype next year, followed shortly by additional tests to confirm its design and performance metrics. As European interest in defense technology grows, Vertical is clearly positioned to become a significant force within the continent’s rapidly evolving defense tech ecosystem.
