It is less than a decade since Balázs Nagy arrived in Munich for a master’s in aerospace engineering. Today, the 31-year-old former judo champion leads a fast-growing defence tech start-up that is catching the attention of senior government and military officials across Europe.
The company, which makes small unmanned aircraft designed to destroy hostile drones, is on the verge of launching a new production site that will make 1,000 systems a month. The goal, Nagy says, is for Tytan Technologies to be “the most important player in European air defence”.
It is no coincidence that Tytan came into being in Munich. Although the Bavarian capital may still be best known for lederhosen, Oktoberfest and its football team, in the past few years it has also launched some of Europe’s most successful defence start-ups.
The booming young sector includes Helsing, an AI-powered armed drone maker that is one of Europe’s most valuable start-ups, and Quantum Systems, a producer of surveillance drones that is currently preparing for an IPO.
Tytan was developed at UnternehmerTUM, a hub attached to the Technical University Munich (TUM) that tops the FT ranking of Europe’s leading start-up hubs for the third year running.
Helmut Schönenberger, the founder and long-serving head of the hub, says Nagy and his Turkish co-founder Batuhan Yumurtacı are shining examples of how the university attracts international talent.
The hub serves as a “playground” for start-ups, offering them the chance to try out ideas with minimal risk, Schönenberger says. About 1,000 teams per year use the hub “to experiment, to build the prototypes and the workshops, to test them on the sides, to talk to the first customers”.
TUM is far from the only start-up engine in the city. It is part of a sprawling web of universities, established industrial players and young new entrants that have helped make Munich and the surrounding region into arguably Germany’s most important centre for entrepreneurship.
Young companies from Bavaria raised a total of €3.3bn in funding in 2025, according to a study in January by EY, with Helsing securing the largest round of funding at €600mn, followed by battery maker Green Flexibility and the biotech company Tubulis.
That eclipsed the €2.7bn raised in Berlin, where start-ups tend to focus on fintech and ecommerce, as Munich benefits from its strength in science and engineering, the surge in European defence spending and the AI boom.
The region’s ties to defence date back to the 19th century, when Bavaria was still an independent state with its own army. Arms makers grew up around defence, later developing a significant aviation industry that would become a key part of the Nazi war machine. After postwar demilitarisation imposed by Allied powers, Germany began to re-arm.
Franz Josef Strauss, a towering figure in Bavaria’s politically dominant Christian Social Union (CSU), channelled his energy into building up the local aerospace industry from the 1950s onwards, both as West Germany’s defence and finance minister and later as state premier.
He played a key role in the 1970 founding of the European aerospace group Airbus.
Though he was rocked by multiple scandals, Strauss “made Bavaria a global player in terms of economic development and the country’s economic potential, especially in aviation”, says Andreas Heusler, a local historian.
Successive CSU governments in Bavaria have continued in that vein. The state government in 2024 approved a law to make it easier for arms companies to set up and expand their operations, as well as helping firms in the struggling auto sector switch to working on defence. It also barred universities from imposing bans on research for military purposes — an approach that remains widespread among German institutions with pacifist ties.
Today, Bavaria hosts many of Germany’s leading defence groups, from Airbus’s defence and space division to tank producer KNDS, missile-maker Diehl and sensor specialist Hensoldt.
The Bundeswehr (German armed forces) has training and testing grounds in the region that are vital for young companies trying out their ideas.
The city also plays host to the Munich security conference, which took place last month, bringing together political, military and industry leaders.
It may help that Bavaria has “never really been revolutionary” according to its vice premier, Hubert Aiwanger, with a favourable attitude within the population towards “the authorities, to the military, to the police.”
Aiwanger, who is also leader of the rightwing populist Freie Wähler (Free Voters), adds: “Bavaria was also always better connected with the Bundeswehr, even in times when people said that they no longer needed an army.”
Munich’s biggest champions say that there is still room for improving the environment for entrepreneurship — especially on a national and European level.
Schönenberger says one of the biggest challenges is European growth financing. He also urges procurement officials to take more risks on young companies.
Although the German armed forces have set up several initiatives aimed at fostering innovation and entrepreneurship in defence — including a new Nato-linked defence accelerator at the Bundeswehr University — some say parts of the military remain a hindrance rather than a help.
Nadine Chochoiek, who helped establish a 2019 entrepreneurship initiative called founders@unibw at the Bundeswehr University, says the army was often reluctant to allow trainee officers to branch out. “The Bundeswehr would say: hey, we’re paying you to become officers . . . You’re not here to do any crazy start-up stuff,” she remembers.
One German official says there is an ongoing “clash of cultures” within the army and the government between “technocrats . . . and impatient, intrinsically driven pragmatists” who are eager to drive innovation.
Launching a new innovation centre for the Bundeswehr in the Bavarian town of Erding in February, defence minister Boris Pistorius said innovation was not a “nice to have” but rather “at the heart of credible deterrence”.
Tytan founder Nagy says his first foray into entrepreneurship involved developing drones to deliver defibrillators to heart attack victims. But in 2023 — a year after Russia’s full-scale invasion of Ukraine — one of his professors suggested that he look at drone solutions for the conflict. He and Yumurtacı drove 20 hours to Kyiv to join a hackathon.
Now the company has a contract with the Bundeswehr to develop a trial system for protecting military bases from hostile drones, as well as deals with several other nations that it says it cannot disclose.
The company has raised €46mn in funding in total and has just moved into a new office, where a lab for building prototypes is filled with 3D printers turning out fuselage parts and workers fiddling with circuitry.
Nagy says policymakers and procurement officials must be willing to back more start-ups as they grapple with combating the threat posed by unmanned systems in a new era of great power rivalry. “We are in a kind of crisis,” he says. “The only way to solve it is to take risks.”