Why can’t the war be won with drones alone, and what role do assault units play in modern warfare? How…
This final instalment showcases the crown jewels of Ukraine's defence innovation — the battle-proven, high-return technologies that are not just changing the face of modern warfare but are also creating unparalleled investment opportunities. This is a look inside the forging of the Arsenal of the Free World.
In the first parts of our series, we analysed the innovative financial architecture of the ‘Danish Model’ and the powerful coalition of investors it has assembled. Having established how capital is being mobilised, we now turn to the most critical question: what is this capital funding?
The Ukrainian defence-industrial complex (DIC), hardened in the crucible of high-intensity war, now represents a unique, high-yield investment opportunity unmatched on the global market. This is no longer a nascent industry; it is a rapidly maturing ecosystem driven by aggressive state stimulus and a battlefield-tested innovation cycle that drastically de-risks R&D.
The market scale is formidable. In 2024, Ukraine’s arms production tripled to $9 billion, with the government setting an ambitious target of $35 billion in production capacity for 2025. This growth is underpinned by robust state demand, with approximately $18.5 billion of the national budget allocated directly for arms and military equipment procurement in 2025. The success of the ‘Danish Model’ has validated the financial mechanics of supporting this ecosystem, but the true value lies in the products themselves. For international partners, investing in Ukraine is about acquiring access to a portfolio of cost-effective, combat-tested, and category-defining defence technologies.
This analysis highlights the most promising investment verticals, demonstrating why Ukraine’s DIC is the cornerstone of the “affordable arsenal of democracy”.
Strategic Reach: The Long-Range Drone Offensive (UAVs)
Ukrainian long-range UAVs have evolved from tactical assets into strategic deep-strike weapons, holding high-value targets hundreds of kilometres within enemy territory at risk. This capability creates a new paradigm of asymmetric warfare, achieving effects previously reserved for multi-million-pound cruise missiles at a fraction of the cost.
- UJ-26 “Bober”: This loitering munition has become the workhorse of strategic operations. With a range of up to 1,200 km and a 20 kg warhead, its high-manoeuvrability “canard” design makes it adept at penetrating air defences.
- UJ-25 “Skyline”:This jet-powered UAV is a technological game-changer. Its top speed of 800 km/h allows it to mimic a cruise missile on radar, making it a strategic enabler for Suppression of Enemy Air Defences (SEAD). It is used to deliberately trigger and map enemy air defence networks, identifying gaps for subsequent, larger strikes.
The Investment Case: The core appeal is achieving strategic effects with expendable, low-cost assets. This creates a huge potential export market for nations seeking affordable strategic deterrence without the political and financial burden of traditional missile systems.
Asymmetric Naval Dominance: The USV Revolution
Ukrainian Unmanned Surface Vessels (USVs) have rendered traditional naval doctrine in the Black Sea obsolete, creating an entirely new category of maritime warfare assets.
- MAGURA V5/V7: This premier sea drone is a testament to rapid, battlefield-driven evolution. The revolutionary V7 modification transforms the platform into the world’s first anti-air USV by integrating adapted air-to-air missiles (like the R-73). This creates a “tactical dilemma”: helicopters, once the primary hunters of USVs, are now the hunted.
- Stalker 5.0: This multi-purpose platform highlights another key investment attraction: cost-effective scalability. With a price point of around €60,000, the Stalker 5.0 can serve not only as a kamikaze drone but also as a logistical “sea truck” for transporting supplies.
The Investment Case: Investing in the MAGURA V7 is not backing an incremental improvement, but a new category creator in coastal access-denial (A2/AD) systems. The Stalker 5.0’s dual-use capability and low cost open up a vast market for nations seeking affordable maritime assets.
The Unmanned Ground War: The UGV Revolution
Driven by the principle “robots should fight, not people,” Ukraine is experiencing explosive growth in Unmanned Ground Vehicles (UGVs). With over 200 companies in the sector and a government plan to field 15,000 robotic systems in 2025, the state-backed demand is clear and compelling. These UGVs are already indispensable battlefield tools:
- Logistics & Evacuation: Platforms like “Taran” (300 kg capacity) and “Vislyuk” (200 kg) are routinely used to deliver supplies and evacuate wounded soldiers from the most dangerous zones.
- Combat Roles: The “Lyutyi” combat drone armed with a machine gun provides remote fire support, while kamikaze UGVs like the “Ratel S” are used to destroy fortifications and vehicles.
The Investment Case: This is a rapidly growing market with powerful government support and a clear strategic goal: automating 100% of frontline logistics to save human lives. An investment in scalable, multi-functional UGV platforms is an investment in the very future of land warfare.
Mastery of the Spectrum: The Electronic Warfare (EW) Edge
The most valuable innovations in Ukraine are often not the drones themselves, but the systems that allow them to operate in a fiercely contested electromagnetic environment.
- Strategic EW: The “Bukovel-AD” system can detect and suppress russian Orlan-10 drones at ranges of up to 70 km and 20 km respectively. The rapid induction of 9 new domestically produced EW systems in July 2025 alone highlights the pace of development.
- EW Countermeasures: The key breakthrough is the use of fibre-optic guidance systems, which makes drones immune to traditional radio-frequency jamming. Universal modules like “Shovkopryad” indicate a scalable, platform-agnostic solution.
The Investment Case: A reliable, scalable, and affordable jam-proof Command and Control (C2) system is the holy grail of modern warfare. The company that perfects this technology will own a key enabler that could be licensed to virtually every drone manufacturer in the world, representing a far larger and more defensible market than any single drone platform.
Intelligent Armor: Redefining Survivability
Ukraine’s approach to armoured vehicles has shifted from passive protection to active, networked defence, reflecting a deep understanding that the primary threat now comes from the air.
- “Novator” Family: Produced by Ukrainian Armor, the updated “Novator PZSА-5” features enhanced STANAG Level 2 protection in direct response to battlefield lessons.
- “Novator 2” with “Krechet” C2 System: This vehicle is not just an APC; it is a mobile command post for air defence units. The integrated “Krechet” system can manage up to 5 digital radars and 10 mobile fire groups simultaneously, tracking 250 air targets. It is designed to prevent hits by creating a mobile, networked anti-drone bubble.
The Investment Case: Investors should view this not as a vehicle manufacturer, but as an integrated combat systems company — a far more valuable proposition that provides solutions to the most pressing threats facing modern mechanised forces.
The Artillery Renaissance: The 2S22 “Bohdana” SPH
The 2S22 “Bohdana” self-propelled howitzer exemplifies Ukraine’s ability to rapidly scale production of NATO-compatible systems while maintaining a decisive cost advantage.
- Production Scalability: Manufacturing has surged from six units per month in 2023 to over 40 units per month in 2025, demonstrating a mature production capability.
- Cost-Effectiveness: This is the core of the “Bohdana’s” investment appeal. At an estimated cost of $2.3 million, it is dramatically more affordable than its closest Western competitor, the French CAESAR, which costs $5.86 million.
- Strategic Alignment: The “Bohdana” was designed from the outset for NATO’s 155mm standard, representing a conscious choice to integrate into the Western defence ecosystem.
The Investment Case: In a war of attrition, quantity has a quality all its own. A battle-proven system that delivers 80% of the performance at 40% of the price is a winning formula for the global export market, positioning Ukraine to dominate the “value” segment of the global artillery market.
Strategic Leap: The FP-5 “Flamingo” Cruise Missile
The emergence of the FP-5 “Flamingo” cruise missile, developed by Fire Point, signals Ukraine’s entry into the elite club of nations capable of producing strategic-level strike weapons. Now in serial production, its capabilities place it among the world’s best.
- Performance: The “Flamingo” can strike targets at ranges exceeding 3,000 km — surpassing many versions of the US Tomahawk — carrying a massive 1,000-1,150 kg warhead at speeds of up to 900 km/h. Its guidance system is designed for high accuracy in a heavy EW environment.
The Investment Case: The “Flamingo” is a strategic asset capable of altering the military balance by holding an adversary’s critical infrastructure at risk from extreme distances. This creates significant export potential for countries seeking a powerful deterrent without the political commitments tied to procuring weapons from major global powers.
An Investment in the Future of European Security
The technologies emerging from Ukraine are not just weapons; they are solutions. They are the products of a unique, real-time innovation loop that connects the frontline with the factory floor.
For the international investment community and allied governments, the path forward is clear. The ZBROYA initiative, powered by financial mechanisms like the Danish Model, offers a de-risked, data-driven pathway to a deep and lasting industrial alliance. Investing in Ukraine’s defence sector is the most direct, economically efficient, and fastest path to securing Ukraine’s victory, rebuilding European defence industrial capacity, and architecting a stronger, more resilient security framework for the future. The time to build in and with Ukraine is now.
Author: Taras Tymchuk, Oleg Mashchenko
