Welcome back to the #33 edition of The New Defense Post!
In this edition, we’ll cover:
Spotlights: Hermeus Hits Unicorn Status with $350M to Build Hypersonic Unmanned Fighters; Warburg Pincus Launches a Dedicated European Defense Investment Platform Backed by Munich Re; The Pentagon's FY2027 Budget Proposes $54.6B for a New Autonomous Warfare Group
Fundraising News of the Week: Recent rounds include Hermeus' $350M Series C for hypersonic aircraft and Shield AI's $2B Series G.
Bonus Section: The EU's AGILE Programme, and what it means for European defense founders.
Spotlights
1. Hermeus Hits Unicorn Status with $350M to Build Hypersonic Unmanned Fighters
Photo Credit: Hermeus
Defense aviation startup Hermeus has closed $350 million in Series C financing, pushing its valuation to $1 billion. The round was led by Khosla Ventures, with participation from Canaan Partners, Founders Fund, In-Q-Tel, RTX Ventures, Cox Enterprises (through Socium Ventures), and Destiny Tech100.
The financing includes $200 million in equity and $150 million in debt. Hermeus is building unmanned aircraft designed to fly at high-Mach speeds, with the long-term goal of reaching Mach 5+. (TechCrunch) (Bloomberg) (Hermeus)
Hermeus has completed two successful test flights. In March 2026, the company flew its Quarterhorse Mk 2.1 demonstrator, an aircraft roughly the size of an F-16, at White Sands Missile Range. The company is now aiming to break the sound barrier with the next iteration.
Hermeus' engine approach is notable: rather than building from scratch, they partnered with RTX subsidiary Pratt & Whitney to modify the F100 engine, a proven military powerplant, adding a precooler and ramjet mode that will eventually enable hypersonic speeds. The company has also moved its headquarters from Atlanta to El Segundo, California.
Technical note: Hermeus' propulsion architecture is a turbine-based combined cycle (TBCC) engine. During takeoff and subsonic flight, it operates as a conventional turbojet using the modified F100. As speed increases, the engine transitions to a ramjet mode where incoming air is compressed purely by the aircraft's forward velocity, eliminating the need for spinning compressor blades.
This dual-mode approach is what makes sustained hypersonic flight (Mach 5+) theoretically achievable with a single engine. The precooler lowers the temperature of incoming air, which is critical at high Mach numbers where air friction heats the intake beyond the limits of conventional turbine materials.
This is an extremely hard engineering problem, and Hermeus' iterative prototyping approach (one new aircraft per year, building on lessons from the last) is designed to de-risk the technology incrementally.
📰 Our Take: CEO AJ Piplica says he expects Hermeus to crash an aeroplane at some point in its development programme, and he considers that part of the process. That is the right approach: build fast, test fast, accept failures, learn, repeat.
It is also the exact opposite of how traditional defense aviation works, where programmes run for decades, and a single test failure can be career-ending. The broader point here is about the speed of iteration.
Hermeus is producing one new full-scale aircraft per year. Lockheed's NGAD programme (now restructured as F-47) took years just to reach concept definition.
For European founders, there are few European equivalents to Hermeus, such as Hypersonica and Destinus. This is a strategically significant space that is still quite underdeveloped.
2. Warburg Pincus Launches Dedicated European Defense Investment Platform, Backed by Munich Re
Photo Credit: defense Industry Europe
U.S. private equity firm Warburg Pincus announced on April 10 the launch of a dedicated European defense investment platform, with MEAG (Munich Re Group's asset manager) as an early backer. The fund size has not been disclosed.
The platform will focus on private equity investments in defense, security, and strategic resilience businesses across Europe. Warburg Pincus manages over $100 billion in assets and has prior aerospace and defense portfolio companies, including Inmarsat, Consolidated Precision Products, and Triumph Group. (Reuters) (Bloomberg) (Warburg Pincus)
The platform has assembled a senior advisory network with experience across NATO, European armed forces, and defense industry leadership. Tobias Weidner, Managing Director and head of the European Industrials team at Warburg Pincus, described the opportunity as driven by "a fundamental reassessment" of Europe's defense needs.
Nicholas Gartside, CIO of Munich Re and board member, called Warburg Pincus "a natural partner" given their multi-decade track record in aerospace and defense investing.
🗣️ Tobias Weidner, Managing Director, Warburg Pincus: "Europe is undergoing a fundamental reassessment of its defense, resilience and security needs, leading to a significant need for scaling of the European defense sector." (Warburg Pincus)
📰 Our Take: This is a strong structural signal. When a $100 billion AUM private equity firm launches a dedicated European defense platform, backed by one of the world's largest reinsurers, it tells us that the smart money considers European rearmament to be a multi-decade investment thesis, not a cyclical trade.
The timing is instructive. Warburg Pincus is not chasing venture-stage hype. They are positioning to acquire and scale the industrial backbone that European defense expansion will require: the manufacturers, the supply chain operators, the dual-use component producers.
For European defense-tech founders, this creates both opportunity and competitive pressure. Opportunity, because PE-backed acquirers will be looking for bolt-on technologies and product lines, which means startups with proven products and government traction become acquisition targets.
Competitive pressure, because well-capitalised PE-backed incumbents will have more resources to compete in procurement processes.
The broader point: the capital stack for European defense is filling in at every level. Venture (NATO Innovation Fund, various European VC funds), growth equity (multiple recent rounds), and now dedicated PE. The ecosystem is maturing fast.
3. The Pentagon's FY2027 Budget Proposes $54.6B for Autonomous Warfare, and $580M for Counter-Drone R&D
Photo Credit: Bloomberg
The White House's FY2027 defense budget request, released on April 3 and detailed in justification documents published this past week, proposes a $1.5 trillion total defense spend, the largest in U.S. history and a 44% increase over FY2026.
Buried in the details is one of the most striking line items in recent Pentagon history: the Defense Autonomous Warfare Group (DAWG), a relatively obscure organisation launched late last year with a $225 million FY2026 budget, is slated for $54.6 billion in FY2027. That is a 24,166% year-over-year increase. The budget also includes over $580 million in R&D funding for the Pentagon's counter-drone task force, and over $2 billion for directed energy research. (Aviation Week) (Defense Daily) (The Defense News)
The DAWG budget alone would exceed the entire U.S. Marine Corps' FY2026 budget ($57.2 billion). Aviation Week reports that the spending proposal points to the creation of a new Autonomous Warfare Command, a joint organisation focused on orchestrating drone and boat swarms.
The template already exists: Ukraine's Unmanned Systems Force and Russia's Rubicon complex. The Pentagon is also requesting roughly $30 billion for Defense Production Act purchases in FY2027, a nearly 100-fold increase over recent levels, signalling a serious push to scale the industrial base.
📰 Our Take: The DAWG number is eye-popping, and Congress will almost certainly reshape it. But even if the final appropriation is a fraction of $54.6 billion, the demand signal is unmistakable: the U.S. is institutionalising autonomous warfare as a core military capability.
For European founders, this matters in two ways. First, the U.S. is building an enormous market for autonomous systems, sensors, C2 software, and directed energy components. European companies that can navigate ITAR and build interoperable systems will find procurement pathways opening.
Second, the DAWG concept, a dedicated autonomous warfare command, is something Europe does not have and will eventually need. Ukraine's Unmanned Systems Force is the closest allied model.
The gap between U.S. autonomous warfare investment and European equivalents is now measured in orders of magnitude, not percentages. The directed energy line is worth watching separately. At $2 billion in R&D, the Pentagon is signalling that high-energy lasers are moving from lab to field. For founders working on power management, beam control, thermal management, or compact energy storage: the addressable market just got a lot larger.
Other News
Fundraising News
Amount | Name | Round | Category |
|---|---|---|---|
$2B | Autonomous Flight Software / AI Pilot | ||
$350M | Hypersonic Unmanned Aircraft |
Pilotix is a European drone technology company building end-to-end solutions, from high-performance drones and flight electronics to advanced software systems. With in-house production and high-precision assembly capabilities, Pilotix delivers reliable, scalable platforms for both civilian and defense applications, including surveillance, industrial operations, and specialised missions. |
Use code HOBBYDRONEF1 for a discount. |
Bonus Section — AGILE: The EU's Fast-Track Fund for Defense Startups
Photo Credit: Eunews
Brussels is trying something genuinely new. The Programme for Agile and Rapid Defense Innovation (AGILE), proposed by the European Commission in March 2026, is a €115 million pilot fund designed to compress the timeline from defense technology development to operational deployment. It targets startups, SMEs, and scale-ups working on AI, drones, robotics, quantum technologies, and cybersecurity. Unlike the European Defense Fund (which funds early R&D) or EDIP (which supports production scale-up), AGILE is aimed squarely at the "valley of death" between prototype and fielded capability.
Individual grants of €1–5 million, with a four-month application-to-grant timeline and up to 100% cost coverage. Single companies can apply without needing consortium partners, a significant departure from most EU defense funding schemes. (European Commission) (Euronews) (Dronelife)
The EU already has a web of defense innovation instruments: the EDF (€7.3 billion for 2021–2027), EUDIS (€1.5 billion for 2025–2027), EDIP (€1.5 billion for 2026–2027), the defense Equity Facility (€500 million), and the SAFE programme (€150 billion in loans). What AGILE adds is speed. Traditional EU defense funding cycles run in years. AGILE promises months. The fund is designed for technologies that can be tested, validated, and used by armed forces within one to three years, a break with the decade-long timelines we've seen from previous EU capability programmes.
If AGILE works as advertised (expected to become operational in 2027), it would be the first EU defense funding instrument genuinely built for startups rather than adapted from frameworks designed for large consortia. The retroactive cost coverage provision, which allows companies to offset costs incurred up to three months before the competition closes, is another tell: this is Brussels acknowledging that startups can't afford to wait.
Let's be clear about what €115 million actually is. Split across 20–30 projects, it's meaningful for seed- and Series A-stage companies, but it's not transformational for the sector.
The real value of AGILE is structural, not financial. If the four-month timeline holds, it changes how European defense startups can plan their cash runways. The single-applicant model removes one of the biggest pain points of EU funding: finding consortium partners before you can even apply.
And the focus on the prototype-to-deployment gap addresses the exact bottleneck that has killed more European defense startups than any technical challenge. For founders: watch the regulation closely as it moves through the European Parliament and Council. The devil will be in the eligibility criteria and the definition of "disruptive defense technology." If AGILE ends up funding only dual-use projects with a clear civilian angle, its utility for pure defense startups will be limited. If it genuinely funds weapons-adjacent technology, it could be a step change.
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