UK MOD backs SMEs with £35m for dual-use tech
On Small Business Saturday (6 December 2025), the Ministry of Defence set out how £35 million of support since July 2024 is helping small firms turn ideas such as blast-protection blocks and laser‑detection optics into equipment moving towards the front line, while signposting a long‑term innovation pot of at least £400 million a year.
If you’re hearing about Small Business Saturday for the first time, it’s the UK’s yearly push to back local firms on the first Saturday of December. Today the Department for Business and Trade encouraged people across the country to shop local and champion 5.7 million small businesses.
Who steers all this? UK Defence Innovation (UKDI) was formally established on 1 July 2025 with a ringfenced annual budget of at least £400 million to speed promising technology into service and support jobs in fast‑growing, dual‑use sectors. Ringfenced simply means money set aside only for this purpose.
How the money moves, in plain English: you can pitch into DASA’s open calls and themed challenges; if your idea looks promising, early grants help you test it with expert support from the Defence Science and Technology Laboratory. If trials succeed, UKDI works with procurement teams to map a route to manufacturing at scale. It’s a clearer path from idea to kit than before, with DASA and other innovation teams now aligned under UKDI.
Here are three live examples you can point to. QuickBlock in Scotland adapted its interlocking blocks for ballistic protection. Swansea University spin‑out Trauma Simulation built whole‑body training models that help medics practise life‑saving interventions. In the South West, Sentinel Photonics grew from a founder‑led start‑up to a 20‑strong team; its rifle‑sight attachments protect users’ eyes from lasers and reduce the chance of laser surveillance and are being integrated with KS1 rifles entering service.
What “dual‑use” really means: a dual‑use item can work in civilian and military settings. Think sensors and lasers used in medical devices and also for defence. Because of that, many dual‑use items need an export licence, and transfers can include software and know‑how, not just boxes on a pallet. If your project straddles both worlds, plan for licensing early.
Does this create jobs and value? According to the DASA Impact Report 2025 (produced with Beauhurst), companies backed by DASA have generated nearly £1 billion in economic value and created around 1,800 jobs across the UK, with £174 million raised by DASA‑funded firms in 2024 alone. Treat these as independent, published figures you can cite in class or coursework.
Policy signal to watch: ministers say at least 10% of the MOD’s equipment procurement budget will go on novel technologies each year. For you, that’s a clear indicator of sustained demand for AI‑enabled systems, autonomy, advanced sensors and other emerging tech through the rest of the decade.
The small‑business angle goes beyond grants. Government plans include a new Defence Office for Small Business Growth and a target to lift total MOD spending with SMEs to about £7.5 billion by 2028, a step up on recent levels. This matters because most innovation comes from supply chains, not just the biggest contractors.
A quick ethics and law checkpoint you can discuss with students: sharing a prototype abroad or screensharing technical details can count as an “export” of controlled technology. Even temporary or virtual transfers may need a licence. Responsible innovation isn’t just about what we build; it’s also about where and how we share it.
What this means if you’re studying engineering, business or policy: treat defence as one practical route to scale a good idea. You’ll need to show real‑world utility, design with safety in mind, and understand the rules around dual‑use. Look at DASA’s open calls to see what problems are being prioritised right now and how proposals are structured.
Big picture takeaway: the UK is using public funding to pull proven commercial ideas into defence faster, with a dedicated £400 million yearly pot and a clearer path from lab bench to field use. Your role-whether as a student, teacher or founder-is to ask smart questions about impact, oversight and value for money while making the most of the opportunities on offer.