EU defence start-ups face funding and bureaucracy traps, MEPs warn

European defence start-ups and small and medium-sized businesses are facing two major barriers as they try to bring new technologies into production, according to a report backed by more than 400 members of the European Parliament on Thursday. The report says companies can struggle first to move from development to proving military effectiveness, and then again to secure customers and first contracts. It argues that these gaps are slowing the path from innovation to deployment across the European defence sector.

Latvian Green MEP Mārtiņš Staķis, the report's rapporteur, said small companies often invent strong new defence technologies but fail to reach production or end up growing outside Europe. He said Europe's defence systems are still built for older conflicts and are reluctant to accept failure. The report calls for EU funding tools to support successful projects after testing, so they can win initial orders and later follow-on contracts from member states' armed forces.

It also says smaller firms need better access to testing facilities, military end-users, and the infrastructure needed to demonstrate, validate and certify their products. The report also urges the European Union to reduce red tape and lengthy approval procedures that can place smaller businesses at a disadvantage compared with larger established contractors. That concern comes as the European Commission's Readiness 2030 plan seeks to expand production of strategic equipment including air and missile defence, artillery systems, missiles, ammunition and anti-drone systems.

The plan includes a €150 billion loan package and is the centrepiece of the bloc's effort to strengthen its defence industrial base by the end of the decade. The debate has wider significance because the EU's rearmament drive is taking place against a backdrop of heightened security concerns in Europe. The report notes that western intelligence agencies have identified 2030 as a year when Russia could attack the North Atlantic Treaty Alliance, and 23 of the EU's 27 member states are also NATO members.

That makes the speed and resilience of Europe's defence production chain a strategic issue, not just an industrial one. The report suggests that if smaller firms cannot bridge the funding and procurement gaps, promising technologies may never reach European armed forces. The report also reflects a broader challenge for the EU as it tries to turn political commitments into industrial capacity.

European institutions have acknowledged difficulties in matching the scale of their ambitions with the pace of delivery. For smaller defence companies, the problem is not only invention but also access to the systems, contracts and certification processes that allow a product to move from prototype to deployment. The report's supporters say those obstacles can push successful firms to expand elsewhere, including the United States.

What remains unclear is how quickly EU institutions and member states will change funding and procurement rules in response. The report sets out the problem and calls for support, but it does not itself create new financing or remove the administrative hurdles it criticises. The next stage will be whether the European Commission and national governments translate the recommendations into practical measures for testing, certification and first-contract support.

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