Stefan Roebel: Building Europe’s New Defense Tech Prime

0:00Welcome everyone back to another episode of the UBC Podcast. This is one where we're diving into the future of European defense tech with a founder who truly understands the front line. Stefan Rurbel, the CEO and co-founder of ARX Robotics. If you've been watching the shift toward dual-use tech autonomy and European tech sovereignty, this one is for you. We'll unpack how ARX is transforming land warfare with modular robotics, why Europe must lead in defense innovation, and how this startup is already making waves across NATO and Ukraine. As always, we do this for the ecosystem, so let's go deep, let's go together.

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2:18This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Welcome, Stefan. Welcome to the podcast. Thanks for having me, man. Before we dive into all the details, can you just walk us through the founding story of ARK's robotics and what sparked your decision to build in the defense space? There's two sides to the story. There's a personal one. So myself being a service member for 12 years, I've been deployed to Afghanistan and spent some time in the US with the armed forces. Officially retired in 2012, then did a little detour to e-commerce for Amazon and eBay, I led the European operation at ASOS and then worked for Grover for a fintech startup based out of Berlin from Series A to Unicorn.

3:14So I've done a little detour, but I still have this military background. Long story short, so my Benjamin Button career from big corporates to startups ended with a dinner meeting Mark on a Thursday afternoon. I was really tired, not really motivated. Mark was on the lookout for a co-founder. I was negotiating with my wife. Early stage startup would be something we would be okay to do because there's no money, no nothing. If you worked in business for 12 years and living with family, you already have a little bit of economic standards you need to maintain to whatever I agree. I made a deal with my wife that I have 12 months on good German unemployment money to find something that generates revenue.

3:58So I was looking for something more like seed, series A, pre-seed stage, proof of concept. So in between appointments, one of the headhunters I worked with said, okay, meet Mark. He's great. I said, okay, fine. I said, Thursday late afternoon, Mark tired. I was tired. But then we clicked right away, right? We talked for three hours how outdated the equipment is we use in Europe and how much work needs to be done to turn this around. Even though I was out of the armed forces for 12 years, it still clicked, right? I still understand military language. At the same time, being with major global companies for the last decades, I have some experience building companies and I have more data points of what really goes well and what goes not so well.

4:44So that obviously helps with an early stage startup. So that was a good balance between, okay, I can add value here with my experience, but I still have the resilience to hopefully survive early stage startup life, which is insane. And for Mark, the journey began like 2021. Mark is an infantryman, same for Max, our third co-founder. And in infantry, there's a problem. If you defend a house, usually you're outnumbered by your adversaries. So what you do is you try to find a broomstick or any stick, usually a broomstick, and then you paint the tip of the broomstick black so it looks like a gun and you put it in the window, right?

5:19And in the dark, it looks like a gun and people are, oh, I don't know what it is. And if you're lucky, you really deter the enemy and you get away with it. So what Mark did in 2021 is to make the broomstick digital. So what he did is he used the JBL box, glued a metal pin on one edge, and then used a part of a soft air with the light signal. So whenever you push the sound of a shotgun or a shot through the JBL box, the bus woofer would move and then pushes the metal pin through a gate that flashes then the tip of the soft air gun. So it looks like a shot, it sounds like a shot. And then he used, from a discotek, a small smoke machine to trigger a small smoke.

6:04So it actually added like, you know, 3D effect of a real gun being placed in a house. And he won an award with this invention back then. And the question was, how do we make this thing mobile, right? It's good to have it in the window. Okay, quite stationary. Okay, can we make this mobile? And he built the first robot somewhere in 2022. And then things started to click. So, okay, this is nothing we've ever seen. Is there more? And of course there was more, but, you know, he used his own money to fund the first prototypes. And then at this stage, he was part of the early stage studio program of Project A.

6:39And part of it was, okay, we need to find your co-founder that has business experience, but still understands defense. And there is not many of us that are willing to go back to really early stage startup life. So we met, he told me the story. He told me the outlook, he wants to transform the training and simulation, but also you want to revolutionize ideally the way we operate in the armed forces. And, you know, this is just the beginning of that commercial. So he was really like this think big person, high energy, whatever it takes kind of guy that I was looking for. So I got hooked, got back, talked to my wife, told her all the options I found on my trips.

7:20And she looked at me and said, okay, I appreciate you giving me all the other options, but you already made your decision, right? I did. Yeah. Long story short, I went back six months on unemployment money. And then we managed to raise the first funds from Project A and our pre-seed investments. So that was how we met and what the idea was back then and everything evolved pretty quickly from there. Tell me, what was the first breakthrough moment where you realized that ARX would really have a real demand in the market? When we managed to sell shitty prototypes, like not even reddish prototypes.

7:56We did like prototypes, fast prototyping, no money, and people got interested in that, right? And this is when you get, okay, we are onto something. and then you move on first funding and then you build better prototypes. And then we managed to figure out, okay, the decoy application we had on top is just one application. The problem we've seen in the armed forces so far was there was only single use systems, right? And what really is needed on frontline, especially is something that is modular on the fly, that you can change the application more like a Swiss knife approach. And we haven't seen that.

8:30And then we managed to pivot the first time really and said, okay, the modularity is one of the key structures that we need to fix for the armed forces. At the same time, we understood that, okay, there is no real process for that from the KUMIT point of view in the armed forces. So the bet was really big and we got laughed at quite a lot at the first year, right? Because we were so drastically off what has been there versus what our idea was to front run everything, not waiting until$10 hour, just proactively develop something that we figured, okay, this is so far away from status quo that we definitely are onto something.

9:14Could you maybe just, for the listener, describe the product suite of ARCS today, just so we have everyone up to speed? What are you building? You started with this duct tape-made gun robot, so to say, decoy robot. But what is it today? What's the product suite? The product suite is more of your ground systems. That means we have ground robotic systems, different sizes. is at the moment we have a particular size, our RCS size, that means 500 kilograms of payload, load to the ground, tracked vehicle, battery powered, 40 kilometers of range, 500 kilograms of payload with autonomy. So that's one of our core product that we have.

9:55So that's our autonomy system. What we figured out on the way that was the second pivot is, okay, we have a system that can communicate over data, which is quite normal in a robotic world, right? Because this is how you operate with robotic systems. If you bring it into a military environment where most of the equipment is from the 80s, 90s, or 2000s. You can have the best AI in the world, but you can't put the AI in the exhaust. You need something that allows software on the system. So we need to also retrofit existing infrastructure to allow those two systems to communicate. Because at this stage, we have robotic systems.

10:29You can communicate with data, mission data, all of that stuff. The robots can go and execute. But on the other hand, you have legacy systems where a poor soldier sits in with a radio waiting for commands to follow. And we need to get those two on one level. So the second part of what we do is actually retrofitting and building the software capability for legacy systems to be integrated in this digital layer and also communicate over data. Because going forward, everything will be digital. There will be something, I don't know, you might have played Command & Conquer in the past, right, where you see all your assets and we will move to a better management system going forward that will not look exactly like that, but somewhat similar to what we've had in computer game past.

11:11I'd love to ask you. So Project Day have gotten really good at defense and they're known for that. But I'd love to ask you about your experience with VCs in general when it comes to understanding this space, what you're building, the nomenclature, all of this. Are we in a good place when it comes to, for generalists to understand what you're doing and actually invest in this stuff? or do you really need a specialist? I mean, you don't. The education happened over the last 18 months, I would say. When we raised first funds in 2023, fundraising was quite interesting, right? Because you run into those B2B investors, SaaS investors that ask all the standard questions, but I have no idea about hardware or defense procurement cycles, value of death, all of that stuff, right?

12:00So what's the TAM? Tell me, what's the TAM? It is, that's really an interesting one. You run into people that have no idea how difficult it is to generate revenues, the long value of depth that we have in defense. We spent a lot of time educating people on that, but then the conviction was not really there because they were too far out of their comfort zone. So it was 23. 24 was different. To be fair, we also got lucky because we got oversubscribed in all of our RAMs. So we handpicked our investors. That was always good. So our first investor, our board member, also captain of the German armed force, so he knows what he's talking about.

12:39A second investment came from the NATO Innovation Fund, which had really strong signaling. Obviously, our board member there was a major of the US Air Force. So he also understood everything that we were talking about. The difference making here is that people that actually understood what we are building came to site and see it firsthand. And then things clicked. So all of our investors that actually managed to come to site have already got really high conviction and managed to invest also. In 2024, second half and 2025, we have a lot of people being now really well educated about defense procurement cycles.

13:15So the VC community picked up quite quickly, but also because there was a need. You can see the change of growth funds and investment funds moving from the US into a European defense tech. So therefore, the opportunity is quite obvious. So therefore, also everybody jumps on the bandwagon and gets educated and tries to raise the defense mark, right? So therefore, also the partner you're talking to have way more knowledge now. And this is more like an eye-to-eye conversation now, but everybody knows what we are doing and understands what that means and what the risk involved is. So it got really like a lot better over the last 18 months, I would say.

13:52Tell me, how do you weigh as a founder that has the privilege of being able to pick? So there's always these interesting dynamics. Do you want a big fund with a great name? Do you want someone who's smaller, closer to you, who actually will probably be there, to whom their investment in you matter meaningfully if you end up bankrupt? How do you think through all of these things? and maybe in addition to this or adding to it, than the defense specialist perspective? Because the truth is you end up describing here while you said, well, they picked up Quake, while they were also captains in the army before.

14:32True, that was true for our first two investments. We have somewhat a very, not very, but a little bit of a romantic relationship with our investors, right? If you don't click, because you go on a long journey with them, right? with board members and you need to be on the same page when it comes to energy, risk awareness, all of that stuff. Most of the investments actually are based on the partner team, their willingness to commit to high speed, high risk. We always tell people, you know, it's either go big or go home. We have an opportunity here to become one of the new primes in the next five years.

15:08And the outcome is quite binary. Either we are or we don't, right? So there's no point in trying to build a medium-sized company here. This is not the point of our venture. And people need to understand the business we are in. Finding those partners that are fully on board with the mission and have those funds behind them is one part of the story. Then, of course, you need a little bit of diversity, right? You need really early stage, a good operational fund. Project A was a perfect fit for that. They have a great operational team to help us scale, right? So when I needed a recruiter or something, I could pick somebody I could trust because we are a portfolio company and understood that they were willing to give their best for the company for six months of time or so before I managed to hire somebody in-house.

15:51That was great. That was exactly the right thing there. From a signal link point of view, a NATO innovation fund, obviously with LPs being the Ministry of Defenses in Europe and NATO was a perfect signal link partner, but also on the partner side, somebody understood defense and what we want. And then with H3 Capital and Series A, obviously big funds, massive signaling to the market, but also great partner team, super high energy, willing to drive the business. Those two things always go in balance. And then for me, I always ask them, my requirements are, can you get out of my way when I'm being fast and try to build a company, but pick up the phone when I need you.

16:28Are you willing to do that? And usually if they say, yeah, that's exactly how we operate. We don't try to micromanage our portfolio companies, but rather give them advice if they want advice. But that's about it, right? We don't want to slow you down. We want to allow you to be as quickly as you want to be. Let's get back to, you know, I've obviously given all the investors we have listening in, this topic of how you think about picking investors is, of course, super important to get from a founder like you. I would then love to go back a bit to the nitty-gritty details of ARX. And I'd love to ask if you can give us a real-world example of how your systems are being deployed in Ukraine and elsewhere?

17:06Ukraine is a different beast because Ukraine is in war, therefore, war generates chaos. So usually in peacetime, army is a very slow moving organization, big organization, process changes are super slow. But also the implementation of new processes are usually at a much larger scale. When you live in war. Everything breaks down into smaller groups, very dynamic. Therefore, our systems are usually used by a group of 5 to 15 people. What we do is we supply ammunition, food, water to the first trench, and we medevac wounded people from the trench to safety. So this is still part of the kill zone.

17:51So this is where when you put your head out of the trench, you're at risk. So therefore, we try to mitigate the risk of losing lives as much as we can by providing logistic support, but also using our systems for medevac operations. The worst thing that can happen to you on the battlefield is get wounded, not getting shot. When you're shot, you're dead. All of the other people know you're dead. They could focus on staying alive themselves. If you're wounded, they try to help you survive. That means you're not only out of order yourself, but also you take three other people with you or four because they need to take care of you.

18:27And if you transport a wounded person, that usually takes four people. It's quite heavy, depending with all the equipment. And usually in a kill zone, you have three to five kilometers to walk. So that's a long distance if you have to carry a person. And that's high risk country because you still have FPV drones, mortar strikes, artillery, all of the bad stuff. So what we try to do here is help people in the trench to focus on their jobs, staying alive, and use our robots to evacuate wounded people, getting them to safety. So that's the main use cases we have in Ukraine. And that's a little bit different from Europe, right?

18:59Europe is in peace, functional structures, so innovation is way more structured. So here, there's more technical integrations needed for large area surveillance, unmanned air, unmanned ground teaming. So more technical solutions are wanted here, we are working on, right? Saying that, still the logistics and Medivac stuff as basic solution is still wanted, but the implementation here is more technical. I imagine it's two very different machines, and I am sure you learn very different things, whether you're working in Ukraine or you're working with a large, low Danish military. Yes and no. The point here is what we learn in Ukraine will be the reality if we don't manage to deter the Russians quick enough.

19:46As soon as Europe goes to war, we will all end up in garages prepping RC cars with mines. This is the harsh reality we need to face. And therefore, we take all of our lessons learned, all of the quick fixes, the fast prototyping we have in Ukraine, and try to help to voice that message to the European MODs. We need to break with all, not with all, but with most processes we know. The process we know is, okay, we have a problem, then somebody writes up a huge tender of all the requirements they can think of, right? And then a business partner in the industry takes it on and then develop something cost plus for five years.

20:25So that's our iteration cycle right now. And we do something safety first, 500 safety features, and so on and so forth. And then we use this approach to test our first prototype in Ukraine. And then the Ukrainian lieutenant asked, okay, what's the funny red button you have on the back? I say, okay, that's my emergency stop. So why do you have that? I say, okay, that's German regulations. Okay, that's useless. Take it off. Why is the robot stopping? Yeah, he lost connection to the safety remote. Oh, why do you have that? So yeah, that's regulations. Okay, that's useless. Take it off. So we had this conversation.

21:00We got really like, when we went to Kyiv the first time in 2024 early, we got really bloody nose because we came there with our safety first mindset from Europe that we know. And it's not how they work. This is too slow. And we need to realize that the process we have are way too slow. If you look at the drone one in Ukraine, everything changes within two months. Like you go from normal drones to FPV drones, then fishnets, then wire drones, then electronic warfare. That all changes so quickly. If you tender everything up and wait for the prototype to be delivered, we are always late to the party.

21:31That means the only way going forward is to use VC money to front-front the development, develop something for the MODs, which is somewhat procurement ready, but it's not TIL 9. So technical readiness level 9 is our high-end, high-tech stuff that we usually produce. We need to go down to maybe TIL 6. That means mass producer, not super safe, but completely mission ready. We need to go back from safety first to mission first. And this is something we try to put that narrative onto the European MODs. And that's why working in Ukraine and working in Germany or Denmark is not that different because we try to tell them what we do here will not work on the battlefield.

22:15Everything has changed and you need to realize that. And everybody is struggling to understand because they are stuck in their old processes and try to figure out how to change this. So everybody's working on something, but nobody has found the golden process just yet. So to answer your question, it's not that different. We try to figure out what is needed and then adapt quickly to give the customer what the customer wants, get a new data point and go back. But we also use the lesson learned from Ukraine to educate the team in Europe that the way we have done things in the last 20 years will unfortunately not work going forward.

22:44I can imagine that your product would have been radically different had Ukraine not happened, because you wouldn't have had the same cycles as you have had with Ukraine and then you've been able to adapt rapidly. Am I somewhat correct in saying that? It probably is, because the reality in Ukraine is so, so different to what we have in mind. Yeah, because you came with your Afghanistan experience and kind of had that mindset to it, and then you started building, so to say, and then everyone was caught off guard with how the U.K.A. war changed everything in terms of what we need. Yeah, and to be fair, the drone war changed the game.

23:25What we figured out, and that was quite obvious, it was one of the key milestones that we had, was, okay, we need to fix lack of mass. Lack of mass is something we have not worked on in Europe at all. We produce ammunition, all of that stuff, but a high quantity of lower tech systems that can be deployed at low cost is something we are not used to in NATO. We produce high tech systems, low quantity, but very impactful. But those systems will not survive anymore because they are just overwhelmed with lower tech stuff. Lack of mass is something we always had in mind because nobody's doing like working on lack of masks with the European supply chain, because that's super difficult because European supply chain is more expensive.

24:06He tried to stay away from Chinese components, which is also difficult because your third and fourth level supply chain will probably end up being Chinese anyways. So this is a major problem we tried to tackle. And then Ukraine came along and showed us, okay, we are super late to the party. If we want to do this as Europeans, also with Donald Trump's second turn, it was quite obvious that we need to do something for Europe quite quickly, we cannot rely on our US partner and taking a role in the bag and hoping that somebody will bail us out. We've done it for the last 20 years. It will not fly going forward.

24:39What would you think once hopefully the Ukraine war ends soon? Someone like you, would you have to seek out, so to say, the next frontline to continue your iteration in the real world? Or how will you be able to manage as a startup without that? No, no. Everybody in Europe understands that what we have in Arsenal will not help us. So, the goal here is to build the capabilities at scale quick enough to deter any adversary to move into Europe. And this program is kicked off in Germany and all over Europe. So, people know what they need to do. So this is all already set in stone and there is no going back to this.

25:27So that means I would be more than happy if the war stops today. We have a great team in Ukraine. We will take a lot of frontline experience to build more systems based on Ukrainian knowledge in Ukraine and also help Ukraine to restock their capabilities. But at the same time, all the processes in Europe are rolling. So for us, we don't need another frontline. Our success will be also defined if we as Europe will be able to deter any adversary moving into the next five years. Do you see ARKs, so you said you'd be like the dreams and errors, you end up becoming one of the new primes. Do you see ARKs becoming the next era prime, so to say, meaning that our old primes, is it correct to say that our old primes are a bit stuck in the old method of war, so to say?