00:00They are the stars of the German startup scene and newcomers to the defense
00:06industry. Growing in security in Europe has seen them allocated around 1 billion
00:11euros in recent months. But are they really worth that record-breaking
00:15investment? ARX Robotics developed this miniature tank which is fitted with
00:21lasers to confuse the enemy and is able to evacuate injured troops. Investors
00:27recently invested 33 million euros to get the young company off the ground.
00:34What I find worrying is that the war in Ukraine in itself was not enough. It was
00:41transatlantic relations that made the difference. Europe then understood that it
00:46has to stand on its own two feet when it comes to defense and cannot depend on the
00:50US.
00:53There's a specially acute demand for drones like this one built by quantum
00:59systems costing 180,000 euros apiece. The startup is developing its products
01:05without real assurances that they will actually be wanted by militaries. We work
01:10at our own risk. Instead of waiting until we get the big development contracts we
01:15anticipate demand based on feedback from our clients what we hear from the
01:19security and defense market and feedback from Ukraine.
01:25The Hitek drone was co-developed with a young German software outfit. Like other
01:30startups Hitek knows that developing and implementing innovations faster can
01:35provide a decisive advantage in a potential war scenario. So speed is of the
01:41essence.
01:43The special challenge for us is having to create innovations while ensuring that
01:48they meet the certification requirements. The area we're operating in primarily
01:53involves flying systems. Of course there are standards we have to comply with. But on
01:59the other hand they're not designed for processes to be realized as quickly as
02:03possible. So that's the dilemma we face.
02:12In the German armed forces it can take years from tender to purchase. Not ideal for startups.
02:21By the time a decision is made even tech-savvy companies can run out of money and the military
02:27is often the first buyer.
02:31And during that time of course startups can't generate income. Meaning that they can't
02:37persuade investors to give them money to enable further growth. And that's where we
02:43need to explore new approaches.
02:49Also among the prospective new approaches products with all parts made in Germany or at least in Europe.
02:55Currently many components come from overseas, which isn't ideal if a conflict breaks out.
03:03Especially when it comes to defense, we cannot be dependent on countries that are already
03:11classified as strategic opponents. That would be disastrous and short-sighted. So we need to
03:19ensure ASAP that the relevant infrastructure and production are in Europe.
03:28In the future it's crucial to fully integrate innovations with support from AI. That will make
03:34them more effective, but also raise the stakes for German startups.
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