The British Ministry of Defence has launched a $27.6 million fund to help small British startups enter the defense sector as the government seeks to expand access to contracts and accelerate the adoption of new technologies for the U.K. Armed Forces.
The U.K. government said Wednesday that the program is seeking the “next defense unicorn” by supporting innovative companies that have had limited or no previous work with the department, giving them an early route into defense procurement and helping promising firms build the credibility needed to attract private investment.
Eligible businesses must be fully or partly U.K.-owned.
What Is the New Fund Designed to Do?
Defense Secretary John Healey said the initiative is part of the government’s effort to make Britain “the best place in the world to start and grow a defence business,” while strengthening the U.K.’s ability to develop and deploy new military technologies.
The fund is backed by the MOD’s commitment to spend an additional $3.45 billion with small and medium enterprises through May 2028, bringing total SME defense spending to $10.36 billion. Its launch follows the creation of the new Office of Small Business Growth within the agency to help SMEs navigate MOD procurement and attract a wider range of suppliers.
What Capability Areas Will MOD Support?
Contracts supported through the fund will be driven by Armed Forces requirements and led by UK Defence Innovation. MOD said focus areas will include artificial intelligence, machine learning, robotics and autonomy, and enhanced precision weapons.
The fund launch aligns with the Defence Industrial Strategy 2025, which positions the defense sector as a driver of economic growth and innovation, and with the Strategic Defence Review 2025, which aims to realign Britain’s military capabilities with an increasingly volatile global security landscape.
The government has also set a policy goal of increasing defense spending to 2.5 percent of gross domestic product from April 2027.
What Other Measures Are Being Introduced for SMEs?
Alongside the new fund, the MOD plans to hold a “Dragon’s Den”-style event to support early-stage defense technology ideas and establish a Defence Investors’ Advisory Group to connect companies with private financing.
“If our entrepreneurs are willing to take chances, we must be willing to take them too,” Healey said. “This is about a Britain that rewards risk takers and innovators and gives people the belief that this government will back them.”