Market & Industry Insights

The Dutch defense industry is entering a sustained growth phase driven by rising defense budgets, NATO commitments, EU industrial policy, and heightened geopolitical instability. Despite strong demand, technological leadership, and long-term government contracts, many Dutch defense companies face structural financing constraints that limit their ability to scale production, invest in innovation, and strengthen supply chains.

The Netherlands offers a highly advanced and trusted defense ecosystem, with expertise across radar systems, naval platforms, sensors, secure communications, and dual-use technologies. Dutch companies are deeply embedded in NATO and EU supply chains and benefit from the government as a stable, creditworthy customer. However, domestic capital availability remains limited due to ESG-related lending restrictions, low private equity and venture capital appetite, and a mismatch between defense contract timelines and traditional VC return profiles.

As a result, an estimated 300–500 defense-relevant SMEs and mid-sized companies face a significant capital gap, despite strong fundamentals and growing order backlogs. International investors are well positioned to address this gap by providing structured capital solutions—such as growth equity, preferred equity, convertibles, and hybrid instruments—tailored to defense-specific cash flow and contract dynamics.

With rising demand, supportive policy momentum, attractive valuations, and constrained supply, this represents a timely opportunity for international capital to achieve downside-protected returns with equity upside, while supporting a sector of critical strategic and geopolitical importance.

J. Smith

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Dutch defense industry