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Industrial AI, Defence & Space Tech: April 2026 VC Rotation · Deep Tech Germany – AI, Robotics & Frontier Innovation by Startuprad.io™

• 0:00
  Software ate the world. In Germany, that area
• 0:04
  is over. If your startup doesn't touch the physical world,
• 0:08
  capital has already moved on.
• 0:16
  Welcome to StartUpLead IO,
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  your podcast and YouTube blog covering the German
• 0:23
  startup scene with news interviews and
• 0:26
  live events.
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  This is Startup Breakout. I'm Joe, joining you from Frankfurt
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  am Main, Germany. With me today, not from New York
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  City, is Chris Farnbach. Chris, good to have you here. Hello.
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  I'm in my childhood home in the middle of Germany, Witzenhausen.
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  So that means we're in the same state in Hesse.
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  And yeah, people who are watching us on,
• 0:54
  who are actually watching us on YouTube might see some
• 0:57
  tchotchkes from my childhood behind me. Good to be here. You got a big
• 1:01
  episode ahead of us. Yes, we do. A big episode.
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  Our news cut runs from March 23 to April 22,
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  2026. The production date is of course also April
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  22. And the thesis for this month is simple.
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  Dach Venture capital has completed a structural rotation
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  from software to physical infrastructure. The money is
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  going to companies that build things governments and
• 1:27
  enterprises cannot do without. Think
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  defense, space, sovereign technology.
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  Not another SaaS layer, not another marketplace.
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  Hardware with procurement contracts.
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  Yeah, and we can also really see that the numbers are backing that up.
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  So in Germany, for example, we see that companies
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  raised $3.19
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  billion. So like $3.2 billion across more
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  than 130 equity rounds through April. That' a
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  plus from of 15% year on year
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  in the Dach region as a whole. So Deutschland, Austria, Switzerland,
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  GSA, as they say in English, has were
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  $4.12 billion deployed in nearly
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  200 rounds through March. And
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  Switzerland is forecasted to reach
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  1.5 billion Swiss Franks in the first half. That's
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  also more than a third more than
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  last year. So yeah, there
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  seems to be like a weird kind of optimism in the market.
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  Money is there. It is, it is. And I want to
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  add that only the VC funding
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  rounds that have been found. So guys, keep in mind there's a lot
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  of precede, seed, even series A
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  funding rounds that are not on those numbers yet.
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  Also, the geography has shifted. As we talked about
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  in the last episode, Munich overtook Berlin in venture capital
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  for the first time. 2.7 billion
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  euros versus 2.4 billion euros,
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  adding up to a very significant number. Oh, my God. That's not a
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  blip. The point of this take is that it is a
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  structural realignment driven by defense,
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  robotics and industrial AI, which is more
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  prevalent in Munich than in Berlin. We have three
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  predictions on record for this episode.
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  We could be early, but the direction is pretty
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  clear. Thesis number one, Defense tech and space
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  will produce more billion euro outcomes than
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  SAS within 24 months. Thesis number
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  two, Munich's funding lead over Berlin is
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  permanent. Priorities have shifted away from
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  B2C where Berlin is still dominant.
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  Number three, the Nasdaq IPO window for
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  European climate tech is closed until at
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  least 2028. Let us get into
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  it our segment. Number one,
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  Europe's space. That a world would not have
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  thought I would ever talk about that here, Chris, we start
• 4:21
  Artemis. I mean space is the hardest topic at the moment.
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  Everybody loves space. Yeah, exactly.
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  I do. My sons too. I have to read them space stories at night.
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  By the way, ChatGPT is very good. If you tell them how
• 4:36
  old your kids are, what the topic should be, how long you want to read,
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  it comes up and the style of a specific children's
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  book author and it comes up with an amazing good
• 4:47
  night story. That's how they get you. That's how they
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  get you. Anyway, we start with space
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  because this card gave us two significant signals.
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  First, ISA Aerospace, we talked about them quite frequently. The
• 5:02
  munich based lounge company is in talks to raise
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  250 million euros at the
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  2 billion euro valuation that is their largest
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  crown today. They have raised over
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  US$654 million
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  total, including a 150 million euro convertible
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  bond from Elbridge Industrials from
• 5:27
  Elbridge Industries last year.
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  Yeah, and also this is something where the context really matters.
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  Their second orbital launch attempt from Andoya Spaceport,
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  that's in Norway, scrubbed multiple times in
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  late March, once because of an unauthorized boat entering the
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  danger zone, then because of a pressure tank leak, which is
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  something that sounds really dramatic, but it actually happens quite often, even at the
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  NASA and SpaceX attempts.
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  And their first attempt in 2025 ended
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  about 30 seconds after liftoff with the rocket falling
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  into the sea. So yeah, we will, we will see
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  how well they're doing. But also here, given what we've learned
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  from space startups and space projects
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  in the last couple of years, it's. It always these, these
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  steps and improvements are always really incremental from one
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  try to the other, from one attempt to the next.
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  For me actually the question is, does the next launch
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  attempt work? If orbit is achieved, it
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  validates attempt decade of European commercial launch
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  investment. If not, the 250 million round
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  becomes a stress test of investor patience
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  in of course capital intense deep tech Europe needs a
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  sovereign launch capability and ESA Aerospace is
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  the continent's most capitalized bet.
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  And right next to it in Switzerland we see Our second space
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  signal of this episode, Pave Space P A
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  V E that's based in Zurich. They closed a 40 million
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  all in cap because they are paving the way, I guess.
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  They closed a $40 million seed round led by
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  Visionaries Club and Creandum. They're building the
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  Leoba Ly Oba heavy lift kick
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  stage. That's a 20 metric ton vehicle that can
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  deliver up to 5 metric tons of payload from low earth
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  orbit to geostationary or even lun trajectories in
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  under a day. That's what they say. They were founded in
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  2024 by EPFL alumni and they
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  plan a demo launch in October. So it's also an
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  interesting development in that space. I think we'll
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  be looking a lot into space in the future. We
• 7:53
  already may tell the audience that due to compliance of your current
• 7:57
  full time job, they may be hearing you
• 8:01
  before the before summer for the last time here
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  actively with us in startup radio. Very unfortunate.
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  Let's get back to our topics here. A 40 million dollar seat
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  is a mega round by European space standards. To Dach space
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  signals in just one news cut. The space over in
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  narrative is no longer just policy documents.
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  It's real venture capital flowing.
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  Yeah. Moving on from space to defense.
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  Yes, the drone industrial base.
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  Germany's defense budget hits 83
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  billion euros in 2026. This is a 20 billion
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  euro year on year increase. That's a hell lot of
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  money. Projections reach 162 billion
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  by 2029 including off budget funds. And
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  the Trump procurement story is just got a
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  new chapter. So. Yeah, because on April
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  16th a week ago, the German parliament Bundestag
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  budget committee approved a nearly 300 million euro
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  initial order within a 2.4 billion euro
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  framework agreement for Rheinmetall. So I
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  mean really like a, a supplier in that area that
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  has been around for like decades, probably even centuries
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  to manufacture kamikaze. Kamikaze.
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  Kamikaze. Dr. This makes Rheinmetall the third drone supplier
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  for Germany's Lithuania brigade alongside Helsing and
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  Stark Defense. So I mean and overall just the fact that we're talking
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  about these companies now, thinking back a couple of years, all of a
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  sudden we talk about developments in defense
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  tech and military so much. It's fascinating for me I think.
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  Yes, like it's, it's fascinating. Sounds too excited.
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  It's at least like a very visible and interesting shift.
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  Yeah. Yes, exactly. Let us put the total numbers together
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  here. Chris Helsink has a framework of almost
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  1.5 billion euros, 1.46
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  Stark has up to 2.86 billion, also
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  almost 2.9 billion euros. And now
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  Rheinmetall has 2.4 billion.
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  That's a lot of money for drone framework. Across all three
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  suppliers exceeding 7 billion billion
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  euros. Germany is building a really competitive
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  multi vendor drone industrial base. Two startups and one
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  legacy prime that is really extraordinary here
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  now they all shall be used, as I said in
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  Lithuania as part of
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  strengthening NATO's eastern flank.
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  Germany wants to send 5,000 or station 5,000 soldiers
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  there and the UNI wants to be operational in
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  2027 so next year. And all those drone systems must
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  pass qualification testing by April 2027. So
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  also there are a lot of things happening still under the
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  influence of course of the Ukraine war and Russia's actions
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  there, but also under the influence of the really
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  of the unclear future of NATO or
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  rather America's role in NATO. So there Germany
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  can be seen as really stepping up
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  the structural point here that we're trying to make. Germany is the
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  only European market where startups have a visible
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  pathway from the prototype to major
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  procurement contracts. That is why defense startup funding
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  has hit $8.7 billion across Europe in
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  2025. That's 4,43% of
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  all deep tech funding and Germany is at the center of
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  it. Chris. And now we're talking new unicorns, huh? Shouldn't
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  we. Unicorns you?
• 11:58
  Dash zero? I do believe that's how it's pronounced. $110 million
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  series B led by Baldaton
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  Capital valued at 1 billion. They built what they call
• 12:09
  the autonomous nervous system for production AI agents
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  that build do root cause analysis,
• 12:17
  remit, remediation, deployment, validation
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  and cost optimization. Founded only in
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  2023. Already 600 paying customers including
• 12:27
  Solando and Taco Bell headquarters are split
• 12:31
  between Solingen and New York. I think the this
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  headquarter with New York is always a pretty good idea, isn't it? Yeah,
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  obviously. Just as I do. I mean it's interesting, they seem to
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  have a really working use case already and the thesis at Dash O
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  that or Dash Zero is that observability must evolve from
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  monitoring dashboards to autonomous operations. They have a core product
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  called Asian Zero deploying specialized AI agents across
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  the production stack. And if that works and if their thesis
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  proves to be correct and the customer attraction suggests it might be from what we
• 13:04
  are seeing right now then it's a. Yeah, this might be
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  a very like some kind of like a default infrastructure layer.
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  A German unicorn in under three years from founding that is quite
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  speed and it is an infrastructure not
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  Consumer the pattern continues.
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  Policy at scale. By the way, if you
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  haven't seen it, we just published my interview with Thomas
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  Yet Tombeck, undersecretary for startups
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  and digital long term listeners.
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  Longtime listeners will remember him from 2021 where he was
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  a digital commissioner. Heading to 10 billion future fund.
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  Right now I think we're including all the segments up
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  to 55 billion in those instruments. But
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  let us get. Sorry, I'm always taking detours here.
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  The policy segment is unusually dense this
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  month. The new CDU SBD coalition has
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  delivered the most aggressive startup policy package in
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  Germany. Admittedly that's not a high
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  yardstick. And Chris, let me walk you
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  through it. Okay? The WIN initiative,
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  it's something we've talked about under the last cholz government.
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  This was delayed, this didn't get started, but it was actually
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  under new government doubled from 12 to 25
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  billion euros. The largest public private
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  venture capital commitment in European history.
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  Again, the largest private public venture capital
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  commitment in European history. KFW
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  Capital launched Vaxtungs von
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  Zwei, winning growth fund number two, the second 1
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  billion euro fund of funds on April 1st. No joke. The future
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  fund was extended beyond 2030
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  with a total 30 billion euro
• 15:04
  commitment. Yeah, and then
• 15:08
  there's also the institutional infrastructure. So money went to 10
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  startup factories. 10 startup factories were awarded involving
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  more than 120 universities, 114 industry
• 15:19
  partners. There's plans for a 24 hour online
• 15:23
  company registration, which for German bureaucracy
• 15:27
  sounds crazy. There's a new digital ministry. Yeah,
• 15:31
  you got even more. So yeah,
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  yeah. There are three capital mobilization
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  tracks that are now operating
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  simultaneously. Win two, it's the Private Public
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  Partnership for Institutional Capital vaccums four
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  two funder funds. Basically KFW Capital will use it
• 15:53
  to seed new VC funds. So those VCs
• 15:57
  can have them as anchor investment. Very likely. And then
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  raise private capital. And the startup factories for deep,
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  for the deep tech pipeline. They help students,
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  PhD candidates, PhDs, professors to
• 16:12
  launch out of universities. And this
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  is structural policy that is not really election cycle
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  signaling. Yeah. So I mean even if we sum up what
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  we talked about for now, yeah, we have like defense procurement, we have the space
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  thing, we have venture capital going up
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  now here, these tax incentives, infrastructure being
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  improved. So yeah, what we definitely can see,
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  I mean another, it's another question how internationally competitive it is. But what we
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  can see, just looking at Germany itself, this really means,
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  it feels like what is like the most comprehensive startup
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  industrial policy in the country's history. So that's really
• 16:53
  interesting. One question is execution what comes out of it as it as
• 16:56
  is always the case but we can definitely say that things are
• 17:00
  happening. Segment number five, you can
• 17:03
  totally tell via very analytical here. On
• 17:07
  our way with the space thing.
• 17:11
  Segment number five, let's talk a little bit about fintech tokenization
• 17:15
  and the IPO reshuffle. Two fintech
• 17:18
  signals and one IPO story that ties everything kind of a little
• 17:22
  bit together for us. First, Midas in Berlin, $50 million
• 17:26
  Series A led by RRE and
• 17:29
  Crandom. You remember them from the other story with
• 17:33
  Franklin Templeton and Coinbase Ventures on the cap
• 17:37
  table. They have powered over 1.4 billion euros
• 17:40
  in tokenized assets insurance and are launching a
• 17:44
  liquidity layer for instant redemption on tokenized
• 17:48
  products. Yeah, and I mean if you look at this Franklin
• 17:51
  Templeton and Coinbase on the same cap table, that's
• 17:55
  like a real. That tells you that real world
• 17:59
  asset tokenization is crossing from what used
• 18:02
  to be like crypto native experimentation to now institutional
• 18:06
  Rails. And here we see. We talked so much about Munich so far,
• 18:10
  but here we see that really Berlin is becoming an infrastructure hub
• 18:13
  for this type of tokenized finance in Europe.
• 18:20
  And then Bitpanda, the Austrian unicorn,
• 18:23
  we're talking about quite a lot. The Vienna based platform is
• 18:27
  advancing a Frankfurt IPO at a 4
• 18:31
  to 5 billion euro valuation.
• 18:34
  Goldman Sachs, Citi and Deutsche bank are advising
• 18:38
  they choose Frankfurt over London. Explicitly.
• 18:41
  Explicitly, sorry. Citing weak
• 18:44
  liquidity on the London Stock Exchange. Lse.
• 18:48
  If Big Panda succeed, it validates Frankfurt as
• 18:52
  a viable tech IPO venue. Yeah, especially
• 18:56
  since okay, I now am like the bearer of bad news. On the other side
• 18:59
  of the Atlantic we see eins, fun 1.5
• 19:04
  a company working in the climate
• 19:07
  climate change space which has shelved its nasdaq.
• 19:11
  NASDAQ listing. It's with. They have the
• 19:15
  seat in Hamburg. It's a Hamburg climate tech unicorn. Even
• 19:19
  they have 520 million euros in revenue. They but they were
• 19:23
  citing tariff turmoil. So I mean definitely the
• 19:27
  mood in the US at least coming
• 19:31
  from the government regarding anything climate tech has
• 19:35
  really shifted. They may delay until
• 19:38
  after the 2028 US election. You were hinting at it in the beginning
• 19:42
  already that this might be the case for several climate. And
• 19:46
  it's the first major German IPO casualty of
• 19:50
  transatlantic trade friction.
• 19:54
  So you have Bitpanda going to Frankfurt. Eins Kommer
• 19:59
  kind of running away from nasdaq. The total
• 20:03
  IPO geography is shifting in real time as we're
• 20:06
  looking at it. Chris, our prediction, Frankfurt becomes The default
• 20:10
  European IPO tech listing. Venue within let's say
• 20:14
  18 months. Your prediction? My prediction.
• 20:18
  Let's do a little lightning round. Planetary in Switzerland.
• 20:22
  23 million euros for a full stack fermentation startup
• 20:25
  building bioeconomy infrastructure led by Radical
• 20:29
  Capital. Meaning Radical Capital but spelled with a K
• 20:33
  in the radical and at given Ventures announced April
• 20:37
  20. But you know, it's either it should be
• 20:41
  Radical Capital or it should be Radical Capital, but they
• 20:44
  decided for Radical Capital in the right.
• 20:48
  Ah, these are the things I, I want to be part of those meetings so
• 20:52
  I can be like the grumpy German and be like
• 20:56
  actually so anyway, peak Quantum in Munich.
• 20:59
  2.2 million euro pre seed for fault resistant
• 21:02
  superconducting quantum chips. It's a spin off
• 21:06
  of tum, the technical University of Munich
• 21:10
  selected to operate the EU Chips act supreme pilot line. They
• 21:13
  have a total funding of 5 million euros. They announced it in
• 21:17
  April 14 early. But Munich deep tech pipeline here
• 21:21
  keeps producing. Yes guys, let us
• 21:25
  close here with the big picture. Three predictions on record. One,
• 21:28
  defense and space will out produce SaaS in billion
• 21:32
  euro outcomes within 24 months. Yes Chris, I know my
• 21:35
  prediction. Two, Munich lead over.
• 21:39
  Munich's lead over Berlin is permanent. Three, the NASDAQ window is closed.
• 21:42
  Frankfurt takes over. Yeah,
• 21:46
  and so we also see here that there's a connecting thread which is procurement.
• 21:50
  So every major signal this month has a buyer on the
• 21:54
  other side. Governments are buying drones, airlines are booking launch slots, pension
• 21:58
  funds are buying tokenized yield. And so like the
• 22:01
  startups winning the cycle are the ones where someone already has
• 22:05
  has a budget and has a budget plan. Good for them. Yeah,
• 22:09
  that is the editorial line. If your customers have. If your
• 22:12
  customer has a procurement budget and your product touches the physical world.
• 22:17
  Dark cattle markets have never been more receptive.
• 22:20
  If you're building another software layer for crowded market, the
• 22:24
  funding environment just got harder. And also what
• 22:27
  we talked about, the policy infrastructure in Germany is finally catching up. 25
• 22:31
  billion euro wind capital, a second fund of
• 22:35
  funds, three parallel capital tracks running simultaneously.
• 22:39
  And we can really say that Germany has never deployed this much capital
• 22:42
  infrastructure for startups.
• 22:46
  Again, not a very high bar, but the the numbers
• 22:50
  55 million is totally staggering. Let's do a
• 22:54
  little bit last word. For me, the old question was can Germany build
• 22:57
  startups? The new question is can Germany execute
• 23:01
  on the startup is has already built the
• 23:04
  capitalist there, the procurement is there, the policy there.
• 23:08
  Now it is about delivery. Yes.
• 23:11
  Chop chop people does have a budget
• 23:15
  line. You are not building a startup, you're building a story.
• 23:19
  Guys, thank you very much. And as we said this
• 23:22
  the next maybe the last startup used for Chris
• 23:26
  and after 11 years he joined me for the Startup News
• 23:30
  in May 2015. Chris, can you believe it?
• 23:34
  Yes, yes. No it feels doesn't feel this
• 23:37
  long. Yeah I know I have good friends that I
• 23:41
  know less longer that sounded
• 23:45
  horrible but yes.
• 23:49
  Oh yeah. 11 years. That's it. Yeah
• 23:54
  and you'll hopefully join us for the main use again and then
• 23:58
  maybe the news will only be me you we will see guys for a final
• 24:02
  goodbye. We will see if as but all of it. Nothing is permanent. At least
• 24:05
  for now. Yeah but you are not leaving startup radio. You're only
• 24:09
  dropping the active mic. I will be in the background.
• 24:13
  I will be in the background for like as part of the company as
• 24:17
  I was before but just not
• 24:21
  hosting anymore. Guys, thank you very much. Was a
• 24:25
  pleasure. Thank you. Bye bye.
• 24:32
  That's all folks. Find more news, streams,
• 24:35
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• 24:37
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• 24:41
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