This Week in Dual-Use

NEWS

France’s spy service drops Palantir

Europeans are dependent on the US for the best AI, at least in the near term. But that is not necessarily true for defence and intelligence software. France’s spy service, DGSI, is replacing Palantir. It will instead use technology provided by French company ChapsVision.

So far, so French.

In fact, France follows in the footsteps of Germany’s domestic intelligence agency, BfV, which recently announced it would replace Palantir with the same French technology.

That will come as a surprise to many in the defence and security industry. The working assumption has been that no company can rival Palantir’s product. But the desire to decouple from American technology is growing ever stronger.

Last year the UK MOD awarded Palantir a three-year, £240M contract for data analytics without competitive tender. It was announced during Trump’s state visit in September 2025.

Meanwhile, the British government is currently reconsidering whether it wants to use Palantir for the NHS. It might want to ask ChapsVision whether it has a health service offering.

America’s lead over China in AI is shrinking

America’s lead over China in AI may be at its narrowest in over a year. On 13th June a Beijing-based AI lab called Zhipu, or Z.ai, announced its latest system, GLM 5.2.

It is the most capable Chinese-trained model to date and, apparently, runs at less than a tenth of the price of Anthropic’s Fable 5. It is also the closest in performance to the top American models.

I wrote last week about European dependence on American models. But dependence cuts both ways. GLM 5.2 is open-source. The US tried to use access as leverage in its battle with Anthropic (gating frontier models from foreign nationals). China answered by giving GLM 5.2 away for free. But downloading Chinese AI is also a strategic dependency.

The lesson to draw is surely that relying on anyone else's model, American or Chinese, is a vulnerability. Because access can be revoked or politically conditioned at any time. The only durable answer is owning the capability yourself.

Ukraine launches TrophyLab, a platform cataloguing captured Russian military tech

Ukraine’s MOD launched an access-controlled online platform last week that provides allied governments and other partners with technical intelligence drawn from captured Russian military hardware.

For decades the West has paid a premium for access to this kind of information. It used to be scant. Now it is available in a portal managed by Ukraine’s MOD.

One of my predictions in January was that Ukraine would become a leader in global defence tech. Not only is it producing some of the most innovative defence hardware and software, but it also sits on a treasure trove of battlefield data.

The classic investor question for an early stage defence tech business asks whether the product has been tested in Ukraine. I think the post-war equivalent might ask whether a product has been trained on Ukrainian data.

FUNDRAISING

DEFENCE

Stark, a German developer of autonomous systems, raised €500M at a €3B valuation. Investors include Sequoia Capital, Founders Fund, NIF, Project A and others.

Comand AI, a French developer of AI-native software for defence and security operations, raised a €32M Series A led by Blossom Capital with participation from existing investor Expeditions.

Powerus, an American drone manufacturer, raised $30M from Unusual Machines.

Traysar, an American subterra defense tech company, raised a $25M seed led by Silent Ventures.

PDKinematics, a Lithuanian developer of GNSS-independent navigation systems, raised a €2M seed led by Coinvest Capital.

SPACE

Katalyst Space, a satellite servicing startup, raised $12M in a round led by Geodesic Capital.

QUANTUM, CYBER & AI

Atom Computing, a developer of fault-tolerant neutral atom quantum computers, raised a $100M Series C led by Third Point Ventures.

PhysicsX, an American developer of AI that designs and tests defence and aerospace hardware, raised a $300M Series C at a $2.4B valuation, led by Temasek.

Dream, an Israeli sovereign AI and cyber defence company for governments, raised a $260M round at a $3B valuation, co-led by Bicycle Capital and Group 11.

Twenty, an American cyber warfare company, raised a $100M Series B at a $1B valuation, led by Accel.

GOING PUBLIC

Doncasters, a British aerospace parts supplier, is seeking to raise $747M at a $4.4B valuation.

Quantum Space agreed to go public through a SPAC that values the company at $1.2B.