Private equity investment in drone tech surges as manufacturing scales up

Global private equity and venture capital investment in drone technology has already reached a record in 2026 as the sector shifts from technology development to rapid manufacturing scale-up.

Transaction value in the sector totaled $13.16 billion in the first nine months of 2026, surpassing the $7.28 billion annual total for 2025, according to S&P Global Market Intelligence data.

There were 176 deals in the first nine months of 2026, down from 192 in full year 2025.

Drone technology companies design, manufacture, or manage unmanned aerial vehicles or unmanned aircraft systems, used for applications such as defense, surveillance, photography and videography, delivery services, agriculture and rescue operations.

The surge in investment capital reflects the drone industry's shift to manufacturing scale-up from technology development, according to sources.

"This is no longer initial novel technology. We're now talking about how many of these you can build and how quickly you can build them. That requires a lot of capital," said Drew Wandzilak, principal for US strategic tech fund at Alumni Ventures Group LLC.

The conflict in Ukraine was a catalyst for this shift, demonstrating the strategic value of high-volume, low-cost drone systems in modern warfare.

Wandzilak said that using multimillion-dollar interceptor missiles to take down $100-$1,000 drones creates a cost imbalance in the absence of a low-cost, scalable counter-drone system. "You're just losing that battle of cost asymmetry," he said.

The rapid advancement of AI has been crucial in making smaller drones as capable as their larger predecessors, said Jon Lusczakoski, partner at AE Industrial Partners LP.

"A lot of the smaller drones now are mostly autonomous, if not fully autonomous. And a lot of that's being done with AI," Lusczakoski said, adding that capabilities such as navigation in areas where GPS is unavailable and coordination of up to 100 drones operating in unison are now powered by AI.

Despite the challenging exit environment, private equity continues to invest in drone technology in anticipation of optimal valuations upon an IPO exit.

"How they're thinking about future exits is largely on the public market side, where valuations are even higher. They're getting comfortable doing private investments at, call it, high teens to 20x EBITDA multiples, but then looking at the public markets and seeing them trade at 30x to infinite multiples," Lusczakoski said.

Largest deals

The US secured the largest amount of private equity investment in 2026, with $9.57 billion across 45 transactions, accounting for nearly 73% of the total value.

Two of the largest transactions in drone technology involved California-based companies.

Anduril Industries Inc. raised $5 billion in a series H round, bringing its valuation to $61 billion. Andreessen Horowitz LLC and Thrive Capital Partners Inc. co-led the round.

Shield AI Inc. secured $2.25 billion in a series G round, bringing its valuation to $12.7 billion. Advent International LP and the strategic investment group of JPMorgan Chase & Co. co-led the round, with existing investors including Snowpoint Ventures, Innovation X Advisors LLC, Riot Ventures Management LLC, Disruptive Technology Advisers LLC and Apandion also participating. Blackstone Inc. is investing $500 million in preferred equity financing and has committed an additional $250 million delayed-draw facility.

Germany pulled in the second-largest private equity transaction value during the period, totaling $1.79 billion. The UK followed with $674.1 million and China with $588 million.