UK funds defence innovation: £35m for SMEs nationwide
Small Business Saturday is usually about local shops, but this year it also came with a defence update. On 6 December 2025, the MOD spotlighted £35m of support since July 2024 for small firms turning ideas into frontline tools, and underlined a ringfenced £400m a year for UK Defence Innovation to keep projects moving from lab to service.
Let’s pin down the policy. The Strategic Defence Review 2025 commits the MOD to spend at least 10% of its equipment procurement budget on novel technologies each year, and backs UKDI with a protected budget of at least £400m to connect commercial tech with procurement. This approach emphasises autonomous systems, AI and software moving at real‑world speed.
Quick glossary: dual‑use means technology that works in civilian life and in defence. DASA is the MOD’s early‑stage funder that finds and backs ideas; Dstl is the science and engineering lab that tests and advises; and UKDI is the new home that helps buy and scale what works faster. If you remember one thing, it’s that this set‑up is designed to shorten the gap between a prototype and equipment people actually use.
Real examples help. QuickBlock in Scotland adapted its click‑together blocks, originally for civilian construction, to act as modular barriers for ballistics and blast protection. Trauma Simulation, a Swansea University spin‑out, builds whole‑body training models that help military medics rehearse life‑saving interventions before deployment. These are the kinds of ‘dual‑use’ ideas students often encounter first in civilian contexts.
Another is Sentinel Photonics in the South West, which has grown to a 20‑strong team. Its scope attachments protect eyesight from lasers and help avoid laser surveillance; these are being integrated with the Armed Forces’ KS1 rifles as they enter service. That’s a clear line from spin‑out science to kit people will actually carry.
Why should students and founders care? Because this isn’t just prototypes-it’s jobs and value. Independent analysis for DASA reports nearly £1 billion in economic value, more than 1,800 jobs created, and £174 million raised by DASA‑backed firms in 2024 alone. When we read claims like these, we always check the publication date and source-this set was published in May 2025.
The wider picture matters. Earlier this year the government set out a £5 billion technology push, including more than £4 billion for autonomous systems and nearly £1 billion for directed‑energy capabilities such as the DragonFire laser. The stated aim is faster fielding and better export potential alongside domestic skills growth.
The context for small firms matters. The UK had 5.64 million small businesses at the start of 2025-the first rise since 2020-and defence is promising easier access through a new Office for Small Business Growth plus a direct‑spend target of £7.5 billion with SMEs by 2028, giving clearer routes from pilot to contract. If you’re a founder, that’s your signal to learn the paperwork as well as the pitch.
Use this as a seminar prompt on ethics and evidence. Dual‑use isn’t simple: a medical trainer can serve ambulances and the battlefield. Ask who benefits, who is at risk, and how export controls, safety testing and transparency should apply. Build arguments with cited sources and be ready to test them against real‑world data.
If you want to take the next step, start with a DASA Open Call and plan for manufacturability within 12 months. Build a short pack that shows the need, proof, cost and scale; then ask your university enterprise team or a regional cluster for feedback before submitting. Your goal is not just a grant-it’s a pathway to a useful product someone will adopt.