New report highlights the importance of AI-enabled dual-use tech and the role of the EU’s startup ecosystem
A new report published by the European Commission and the StepUp StartUps Consortium outlines how Europe is entering a critical phase in which the ability to integrate AI across civilian and defense innovation ecosystems will determine both technological competitiveness and strategic autonomy.
AI is becoming central to Europe’s dual-use technologies, with the European startup and scale-up ecosystem creating new opportunities for innovation, competitiveness and security.
While not formally classified as a dual-use technology, AI acts as a decisive enabler across multiple capability areas – ranging from autonomy and sensing to cybersecurity, logistics, and decision-support.
“Advancing European leadership in dual-use technologies is an intrinsic part of the EU strategy to address critical dependencies, to shape international standards and to make the EU’s role indispensable globally in value chains and in key industries,” says Marc Lemaître, Directorate General for “Research and innovation” (RTD
A growing but fragmented ecosystem
Europe has expanded both its civil and defense innovation programmes in recent years, making important progress towards a more coordinated innovation pipeline for dual-use technologies. EU instruments such as Horizon Europe and the European Defence Fund (including the EU Defence Innovation Scheme, EUDIS) are placing significant emphasis on AI, while synergies between civil and defence programmes have grown.
Notably, the recent opening of the EIC Accelerator to dual-use innovation reflects this trend.
However, the report highlights the opportunity for better integration in European efforts. Currently, civil research and defence programmes are not sufficiently connected which can slow the progression of AI solutions from early research to real-world deployment.
Improving structural connections would help navigate the complexities associated with dual-use AI, which benefits from continuity: shared definitions, aligned funding streams, compatible testing environments, and clear governance. Strengthening these connections could accelerate the journey from promising research outcomes to operational maturity.
Strengths emerging across Europe
Despite these challenges, Europe is already developing strong dual-use AI capabilities.
Key clusters – in security, transportation and robotics – are supported by dynamic hubs such as Munich, Berlin, Paris, Helsinki, Tallinn and Vilnius. Venture activity is rising rapidly, and Europe now leads globally in the number of dual-use AI investment deals.
The rise of specialised dual-use and defense technology funds since 2022, supported by initiatives such as the Defence Equity Facility under InvestEU, alongside the launch of actions such as the EUDIS Defence Business Accelerator or NATO Diana Accelerator, is helping to build a more robust pipeline for defence and dual-use startups and scale-ups.
“We are proud to collaborate with the EIF on the deployment of the Defence Equity Facility … to foster the development of an ecosystem of private funds investing in defense in the EU,” adds Andrius Kubilius, European Commissioner for Defence and Space.
Overcoming barriers to scale
AI-driven dual use startups and scale-ups in Europe face barriers such as: limited access to operational test environments, complex procurement processes, funding gaps between research and deployment, and limited access to contracts.
As a result, many innovations can struggle to move beyond prototype stage.
“In a borderless research area, there can be no weak links. By protecting research security across Europe, we will safeguard academic freedom, our open and trusted research system, and empower Member States to take action,” shares Ekaterina Zaharieva, European Commissioner for Startups, Research and Innovation.
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