Germany’s Digital Defense Gap: Startups Speak Out
Germany's defense startups raise alarm: bureaucracy, lack of funding and stigma stifle innovation. Only 39% would start in Germany again.
Def Tech
By Elke Porter | Canadian German Business News | April 23, 2025
Germany is facing a stark reality check when it comes to digital defense innovation. A new report by Bitkom’s startup initiative Get Started reveals that the majority of defence and dual-use tech startup founders view the country’s ability to defend itself as alarmingly low.
According to the survey, 71% of DefTech founders rate Germany’s defense readiness as poor, and a quarter call it very poor. The culprits? Bureaucratic procurement processes, strict regulations, and a lack of venture capital—all stalling much-needed innovation in AI-driven defense systems, reconnaissance drones, and software-defined warfare.
This report does not even take into consideration today's young Germans, who are still navigating post-pandemic challenges like mental health struggles or all the language barriers—where up to 40% of students in cities like Berlin don’t speak fluent German and some schools report 90% of migrant high school students lacking even basic German language skills.
As of 2024, approximately 16.8 million first-generation immigrants live in Germany, representing about 20% of the population. When including those with a migrant background (either they or at least one parent were not born with German citizenship), the number rises to nearly 25 million, or almost 30% of the population. These figures include significant groups from Turkey (around 2.75 million with ancestral ties), Ukraine (over 1.1 million arrivals in 2022 alone), and Syria.
Joining the German military (Bundeswehr) be challenging due to strict eligibility criteria, which requires candidates to demonstrate mental and physical aptitude for duty. Fluency in German is also critical, as recruits must pass language-intensive selection processes and operate effectively in German-speaking environments. The German military (Bundeswehr) also increasingly expects young recruits to have tech skills, particularly as modern warfare relies heavily on cyber defense, digital systems, and advanced technology.
Bitkom President Dr. Ralf Wintergerst put it bluntly: “If Germany is serious about its so-called Zeitenwende, it must urgently integrate digital technologies into defense strategy. Startups must play a key role in strengthening the Bundeswehr and attracting future talent.”
The data speaks volumes. 100% of respondents demand faster and simpler procurement. 84% call for real-world test labs to pilot innovations with fewer regulatory hurdles—especially for drone tech. The same number want more public investment to unlock private capital. Additionally, 79% seek stronger networking opportunities with the military and other innovation hubs, while 75% support flagship partnerships to advance critical technologies.
But confidence in Germany as a startup location is waning. Only 39% of founders would choose to launch their company in Germany again. A full 59% would look elsewhere—25% in the U.S., 16% in another EU country, and 18% in other global regions. A major reason? Military tech still carries a social stigma in Germany. A third of founders say they feel unappreciated for their work.
This growing concern also resonates internationally. Critics have long argued that Germany, despite being Europe’s largest economy, has not invested enough in its own defence. Former U.S. President Donald Trump famously chastised NATO allies—including Germany—for underfunding their militaries and relying too heavily on U.S. protection. In light of these findings, some now wonder: Was Trump right all along?
While the comment may be controversial, the sentiment has gained traction. The ongoing war in Ukraine and rising global tensions have pushed many countries to reassess their defence strategies. For Germany, the message from its most innovative minds is clear: the future of defence is digital, and the time to act is now.
👉 Full report: www.bitkom.org/Bitkom/Publikationen/Get-Started-DefTech-Report
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