Marking Small Business Saturday on 6 December, the Ministry of Defence highlighted a steady flow of money into early-stage defence tech. Since July 2024, the Defence and Security Accelerator (DASA) has supported projects worth £35 million, while the new UK Defence Innovation (UKDI) body now has a ringfenced £400 million annual budget to move proven ideas into service. For founders and investors, that is a clearer signal of demand than we’ve seen in years.

Policy architecture matters here. The Strategic Defence Review confirms that at least 10% of the MOD’s equipment procurement budget is allocated each year to novel technologies, with UKDI intended to speed up how commercially available tools are bought and fielded. In plain terms: more predictable pull-through from trials to contracts.

The economic footprint is now visible in the data. An independent study published in May found DASA-backed companies have generated close to £1 billion in gross value added and created more than 1,800 jobs across the UK. Despite tougher markets, these firms also raised £174 million in 2024-evidence that dual‑use defence technology can still attract capital when there is a credible route to procurement.

Case studies show how that route can look in practice. In Scotland, QuickBlock’s flat‑pack blocks-originally a civilian product-were adapted for force protection and validated in ballistic and blast trials, with the company moving from concept to orders. That mix of rapid assembly and lower logistics cost has obvious utility beyond defence too.

In Wales, Swansea University spin‑out Trauma Simulation has built whole‑body training models that allow medics to practise procedures from airway management to haemorrhage control. The technology has been adopted on the Military Operational Specialist Teams Training course, replacing costly single‑use or less realistic options and improving readiness for complex trauma.

And in the South West, Sentinel Photonics has grown from a founder‑led start‑up into a 20‑strong team. Its laser‑protection attachments for optics have been integrated with KS1 rifles now entering service, protecting eyesight and reducing detection risk from hostile laser surveillance-a clear example of DASA funding translating into kit used by frontline personnel.

Access is being widened alongside the money. The MOD says a new Defence Office for Small Business Growth will help more firms sell into the supply chain, backed by a target to increase direct spending with SMEs by £2.5 billion by May 2028. Ministers have also talked publicly about lifting direct SME spend to £7.5 billion by 2028, indicating an upward trajectory in demand for smaller suppliers.

It lands in a market where small business numbers are edging up again. Government figures show 5.64 million small firms at the start of 2025. For SME owners weighing sector focus, defence offers longer contracts and clearer buyer intent than many civilian markets right now-especially where products can cross into healthcare, transport or telecoms.

There is still work to do on procurement friction-testing access, security clearances and contract lead times can slow momentum-but the combination of a protected UKDI budget, a fixed share of spending for novel tech and a pipeline of dual‑use case studies suggests a more reliable path from grant to growth. For finance directors, that means factoring defence into 2026 revenue planning rather than treating it as optional upside.

The political intent is equally clear. Luke Pollard, the Minister for Defence Readiness and Industry, has framed the agenda as backing small firms while equipping the Armed Forces with better tools-growth and capability intertwined. For retail investors and SME leaders, the takeaway is straightforward: the money is there, the policy is set, and proof points are emerging across the regions.