Drones are produced in basements and other hiding places by small groups out of Chinese parts with rare earths (not available in the West for military scaling) with addition of some crude, home-made, mostly 3D printed components. A lot of trials and errors are needed. Tanks don’t survive on the modern battlefield facing swarms of precise drones and precise missiles. No scouting, no organic tank defense, no air support can help with this reality. Despite that, Germans keep dreaming:
“The British wanted to make a difference. When they rolled their first tanks into the First World War in 1916, they were hoping for more than just a military breakthrough; they were also facing an economic challenge: their innovative weapon was powerful, but expensive. Consequently, London had to launch special financing programs to develop and build these novel tanks and deploy them to the front. Victory came at a high price—costing millions of lives and billions in expenditure.
Death and misery remain inherent to war, says Rafael Laguna de la Vera, head of the German innovation agency Sprind. Yet, in both economic and military terms, much has shifted. While new weapons continue to deliver decisive results—just as they did in the past—many of these innovative systems are now quite small and relatively inexpensive.
For instance, a tank costing millions can be countered by a drone costing only a thousand euros. This changes everything, says Laguna.
‘The inventory of powerful, expensive weapons is always smaller than that of powerful, inexpensive ones,’ he observes. Of course, there are still large, costly systems that remain necessary—submarines or combat aircraft, for example. But even in those cases, one must consider whether they truly need to be crewed. ‘In my view, probably not,’ he says. Computers, software, and AI make this possible. New technology solves old problems. There is currently intense investment in innovation aimed at making weapons both more effective and more affordable. To keep pace, Germany must reposition itself—in terms of capital, labor, and research and development. Promising results from cutting-edge research must be translated into products and scaled for growth more rapidly. Innovation is the engine of change, in both the civilian and military spheres. However, this places Sprind—an agency established by the federal government in 2019, modeled after the U.S. technology and military agency DARPA—at a crossroads.
The innovation agency’s mandate is twofold: to identify groundbreaking ideas in Germany and to accelerate their development toward market readiness. The question now is whether it will continue on its current path as a strictly civilian organization, or whether its scope will be expanded—much like its American counterpart—to include the military. In short: will Germany get a true equivalent to DARPA? "The answer is yes," says Laguna. "I just can't say when." This is because it is a political decision, and one that involves a significant amount of money.
Sprind is backed by the federal government, which acts as its sole shareholder; it has a core staff of one hundred employees and a budget of 350 million euros. Two-thirds of this funding comes from the Federal Ministry of Education and Research. This allows the agency to support new technologies that are often still in the phase between experimental concept and prototype. To date, it has backed around 250 projects and companies, spanning fields from quantum sensing and aerospace to energy storage, biotechnology, chip technology, and fusion energy.
With the *Zeitenwende*—the "watershed moment" proclaimed in Germany in 2022—the landscape of innovation is also being reshuffled. The reason: the modernization of the *Bundeswehr* (German Armed Forces). To this end, the defense budget is being increased to nearly 130 billion euros annually. Anyone familiar with innovation research, Laguna notes, knows that such a modernization effort requires investing at least ten percent of the total funds into the innovation ecosystem to ensure the goals are reached quickly and effectively.
"Sprind isn't asking for ten billion," he says. "We aren't a late-stage investor." "We are the ones who bring innovations to the surface and develop them to a point where venture capital can step in." But how much should Germany be willing to spend on this early-stage identification and fostering of innovation? According to Laguna, advancing this agenda in its full breadth and depth would require 1.2 billion euros for the civilian sector and roughly two billion euros for the military sector.
Furthermore, the government has set additional milestones with its latest "start-up and scale-up" strategy. The goal is to make it easier to launch businesses, accelerate growth, and keep innovation within the country. While many young German firms are well-positioned in terms of personnel and technology, they often struggle to finance their growth. U.S. funds are quick to step in—but in doing so, they can also gain control over key projects and rapidly move them overseas.
"The Americans are incredibly clever in this regard," says Laguna. "They know exactly how we are positioned, what our capabilities are, and where our limitations lie. Above all, they have the capital and are highly agile."
According to the European Central Bank, the U.S. venture capital industry manages assets totaling 930 billion dollars, while Europe accounts for 200 billion.
"Americans might just hand a founder a $50 million check on the spot. Europe simply can’t keep up with that," says Laguna.
Since the enactment of the 2023 "Freedom Act" for Sprind GmbH, the Leipzig-based agency has been able to operate independently, with minimal bureaucracy and little interference from the federal government. It has the flexibility to allocate its own funds and compensate staff outside the constraints of standard collective bargaining agreements. "Most importantly, we are now permitted to work on military and dual-use projects," Laguna notes—though he immediately adds a significant caveat: while funding for civilian-focused development is available, the situation in the military sector is different.
"We haven’t received any money from the Ministry of Defence yet," says Laguna, "though we do cooperate well." For instance, Sprind is involved in the German Armed Forces' innovation hubs, organizes challenges for the development of drone and anti-drone systems, and was an early investor in the defense start-up Hypersonica. He and his team could—and likely will need to—do much more.
Laguna argues that if Germany is going to take on such significant debt to fund its defense and rearmament policy, the domestic economy should reap the benefits. The borrowed capital must be invested within Germany, fueling local industry and generating economic output for the nation. "That certainly doesn't happen when you use that money to buy F-35 fighter jets from America."
Furthermore, the American innovation agency DARPA has demonstrated over the past six decades that technical developments created for the military can, sooner or later, be adapted for civilian use. The internet, satellite navigation, digital speech recognition, autonomous driving, aspects of artificial intelligence, and even the computer mouse all originated in military laboratories. Today, they form the foundation for vast civilian markets.
Traditional industries are a key factor in the innovation race, he argues. "It’s not as if a start-up building, say, unmanned aerial vehicles needs to go out and establish large-scale manufacturing capabilities from scratch," he says. "Instead, it can leverage the existing supply chain capacity of the automotive sector." This, he notes, is one of Germany’s core strengths: "We understand how industry works. We have the experts. We have an incredibly robust 'Mittelstand'—our small and medium-sized enterprise sector. And we have the supply chains."
The British possessed similar advantages over a century ago. After successfully testing their tanks and initiating mass production through a renowned tractor manufacturer, the French Renault Group also entered the heavy-weaponry market. Their tanks were not only more capable than their British counterparts; they were also cheaper and faster to produce—and that, ultimately, made all the difference.” [1]
1. Drohnen gegen Panzer: Wie Innovation die wirtschaftliche Balance der Verteidigungsindustrie verschiebt - und welche Chance der Chef von Deutschlands Innovationsagentur Sprind darin sieht. Frankfurter Allgemeine Zeitung; Frankfurt. 10 Aug 2026: 20. Von Stephan Finsterbusch und Maximilian Sachse, Frankfurt
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