Israeli protection startups working with the Ministry of Protection Directorate for R&D (DDRD) (MAFAT) have attracted over $1 billion in financing rounds, mergers and acquisitions in 2025. A senior protection official tells “Globes,” “The funding in 2025 has been better than all earlier years mixed, and the 12 months isn’t over but.” In 2024, which was additionally a report 12 months, solely about $150 million was raised. In complete, all funding raised by startups within the discipline lately (previous to 2025) amounted to about $422 million.
The quantity can be spectacular on a global scale. Crunchbase information revealed a number of days in the past exhibits that the full funding raised by protection startups worldwide for the reason that starting of 2025 amounted to $7.7 billion in practically 100 offers. The primary driver was the 9% progress in international protection budgets to about $2.7 trillion – probably the most vital annual soar within the final 30 years, the Stockholm Worldwide Peace Analysis Institute (SIPRI) reviews.
“The 2 years of battle has benefited startups”
Progress is going on regardless of the elemental problem of the sector, in which there’s a single buyer in Israel: the Ministry of Protection. The main consumer is the Israel Protection Forces (IDF), in addition to safety companies and plenty of armies around the globe.
Col. Yishai Kohn, Head of MAFAT’s Planning, Economics & IT Division tells “Globes,” “When a startup desires clients to purchase from it, there are a number of potential clients, and we’re a single tackle. On the similar time, as a result of supervision of the sector worldwide, there’s a reluctance to spend money on safety applied sciences that aren’t twin (army and civilian), and till two years in the past, there was no speak of ‘protection tech.’ The 2 years of battle have benefited startups, as a result of conflicts on the battlefield.”
Because the begin of the battle in October 2023, greater than 130 Israeli startups have been built-in into the battle effort: about 50% in autonomy and AI (together with drones), about 25% in sensors and detectors (some towards drones and a few for deep-tech detectors), and the remaining for navigation, digital warfare, and quantum options.
“Now we have no means or want to affect enterprise, it’s a free market,” stresses Col. Kohn. “We attempt to cooperate as a lot as legally permissible with all of the gamers, and to not say something unhealthy about anybody. If, for instance, we confirm that an organization has obtained orders from us, we are going to confirm. That is essential for traders. We only in the near past met with a German fund, which requested. Our response offers credibility.”
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This credibility with international clients is mirrored in the truth that out of the $1 billion raised, some $400 million got here from US firm Ondas Holdings. The corporate, which operates within the fields of autonomous drones, safety robotics, and superior communications options, has made a sequence of acquisitions in Israel – probably the most notable of which was the acquisition of Sentrycs, which makes a speciality of anti-drone options based mostly on protocol manipulation (Cyber Over RF), for $225 million. This can be a firm whose product can be utilized by the IDF.
One unicorn and lots of of thousands and thousands of {dollars} in funding
One other standout within the discipline this 12 months is Classiq, which develops software program instruments for quantum computing, and raised $110 million – a few of it from abroad traders. Drone firm Heven turned Israel’s first-ever unicorn within the protection business, after elevating $100 million at an organization aluation of $1 billion, with US quantum computing firm IonQ main the funding. An identical quantity was raised by Kela, which was based in 2024, and is growing a platform for connecting civilian applied sciences to army methods. Traders included Sequoia, Lux Capital, and IQT – the funding arm of the CIA.
Ondas’ vital presence displays a broad development within the business, wherein most startups aren’t methods of methods, however the business is transferring in the direction of that. The US firm is accumulating applied sciences by means of acquisitions, however it’s not the one one. Israeli drone firm UVision not too long ago acquired Israeli firm SpearUAV, which develops tactical assault drones launched from a capsule. SpearUAV raised $20 million in a Sequence B spherical in Might final 12 months at a valuation of $80 million.
UVision didn’t disclose the quantity of the acquisition, however “Globes” has discovered that it was not decrease than the earlier $80 million valuation. This can be a vital step, however not the one one which UVision has taken in its efforts to develop into a methods home. About two months in the past, along with US firm Mistral, UVision closed an enormous deal to provide suicide drones to the US Military for $982 million. On the similar time, the corporate is working intently with German big Rheinmetall, to provide lots of of UVISION’s “Hero” sequence of walkie-talkies to a NATO member state. The worldwide media estimates the deal is price lots of of thousands and thousands of euros.
The third main Israeli protection tech firm is Kela, which is growing a spread of SCM (command and management) capabilities on a comparatively small scale, which can carry collectively startups, by utilizing open structure. The corporate is striving to develop into as intensive an integrator as potential that can accumulate, for instance, radar, SIGINT, and interception applied sciences, and if the transfer is profitable, Kela will develop into an actual rival of Elbit Techniques, which operates within the discipline.
Beating the protection giants in tenders
What every of those corporations has in frequent is their shut cooperation with the Ministry of Protection, which advantages them not solely in Israel. Within the first half of 2025 alone, no fewer than 12 Israeli startups signed export agreements in G2G (government-to-government) frameworks – a report that a number of years in the past, would have appeared like a distant dream, when many of the consideration within the discipline was on cybersecurity.
Col. Kohn notes that when the Ministry of Protection works with a startup, it doesn’t take fairness. “We view ourselves as an R&D physique. Generally, we subject corporations with giant provide orders, which isn’t negligible for us both, however this can be a calculated threat designed to offer them with safety. The businesses present traders the availability order.”
One in all MAFAT’s extra sophisticated duties, particularly in the course of the pressures of the battle, is to steer the safety forces to make use of the methods. “Capability is proscribed, it’s unimaginable to tackle 200 drone corporations, however it’s growing. Within the counter-drone discipline, we run discipline trials and place them on the border. The constraints aren’t solely in cash, but additionally within the operational scope that’s potential.”
On the MAFAT Protection Tech convention in cooperation with the Yuval Ne’eman Science, Expertise and Safety Workshop at Tel Aviv College, the pinnacle of MAFAT, Brig. Gen. (res.) Dr. Danny Gold recalled a young for assault drones, which was gained by a number of startups that fashioned a consortium to compete with Israel’s largest three protection corporations (IAI, Elbit and Rafael).
Extra budgets alongside state-guaranteed funding funds
2026 will probably be difficult when it comes to safety, but it’s not anticipated to be related when it comes to operational battle and the orders for the earlier two years. Subsequently, the Ministry of Protection has taken three key steps: Firstly, Dr. Gold determined that at the least 10% of the Ministry of Protection’s R&D finances in 2026 will go to startups and to not the three giant corporations, that are already flourishing because of elevated demand from overseas.
As well as, the Ministry of Protection has joined forces with the Ministry of Finance to ascertain two state-guaranteed funding funds totaling NIS 200 million. “This will probably be a unique 12 months than the earlier one,” says Col. Kohn. “The startups aren’t anticipated to realize the identical backlog of orders. Given the truth that the massive corporations have record-breaking exports, it’s proper to proceed to advertise the (startup) ecosystem.”
The ultimate measure pertains to the API – the Protection Exports Management Division. The Ministry of Protection plans to take away obstacles to advertising some categorised merchandise to greater than 100 international locations.
Revealed by Globes, Israel enterprise information – en.globes.co.il – on December 8, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
