This post is also available in:
עברית (Hebrew)
In recent years, the defense establishment has been facing a dual challenge. On the one hand, there is a growing need for fast, flexible technological solutions in response to evolving threats; on the other hand, budgetary constraints and compressed timelines leave little room for long, conventional development cycles. Within this reality, technologies emerging from young startups have become a central factor in the defense system’s ability to innovate and adapt.
The 2025 year-end data published by MAFAT (the Directorate of Defense Research & Development) point to a clear shift in procurement and development patterns. Over the course of the year, orders totaling approximately NIS 1.08 billion were placed with 152 companies, with nearly half of the deals signed with startups at the pre-seed and seed stages. These are companies that, in most cases, are still developing initial prototypes or early-stage technologies, yet are already managing to integrate into the defense development pipeline.
This model allows the defense establishment to gain early exposure to new solutions and align them with operational needs from the outset. About 35% of the orders were directed toward research and development, while roughly 41% were allocated to procurement—figures that illustrate how early-stage technologies are not confined to the drawing board but are rapidly translated into practical use. The impact is particularly pronounced in the early stages: among young companies, defense orders account on average for roughly one-third of total capital raised, providing a significant financial and developmental anchor.
From a technological perspective, most of the orders in 2025 were directed toward autonomous platforms—led by drones and unmanned systems—which accounted for more than 32% of total deal value. They were followed by AI and digital solutions, cybersecurity technologies, and advanced sensors. Compared with previous years, this shift reflects a move away from a sole focus on detection toward smarter, more autonomous, data-driven systems.
From a defense standpoint, the implications are broad. Autonomous and AI-based technologies help reduce risks to personnel, improve response times, and increase operational precision. At the same time, they lay the groundwork for a technological edge in the international arena. In 2025 alone, 17 Israeli startups signed orders with foreign customers totaling approximately NIS 300 million—nearly matching the cumulative volume of international engagements recorded up to 2024.
Alongside procurement activity, MAFAT also expanded its acceleration mechanisms and industry engagement, issuing calls to tender and operating accelerators that addressed not only combat-related challenges but also logistics and military medicine. One type accelerator is INNOFENSE, which is operated by the iHLS Innovation Center in collaboration with IMoD, which recently accepted the following nine start-ups to the upcoming program:
- Timlul (Transcription)
Technology: Natural Language Processing (NLP) and speech recognition engines for textual and psychological analysis.
Defense application: A decision-support system for sorting and analyzing conversations, identifying patterns and risk factors from verbal and audio data. - Neuromorphic Lab (Ainovia Labs)
Technology: Simultaneous Localization and Mapping (SLAM) based on neuromorphic (brain-inspired) chips.
Defense application: Navigation of drones and robotic platforms in enclosed, GPS-denied environments with minimal energy consumption. - Visionry AI
Technology: Real-time video enhancement under challenging lighting conditions (low-light).
Defense application: Digital night-vision capabilities for security cameras and drones without the need for expensive hardware. - APCO Aviation
Technology: Advanced light aviation solutions and paragliding systems.
Defense application: Precision airdrop of logistical equipment and soft-landing or recovery systems for unmanned aerial vehicles (UAVs). - Kamai
Technology: AI-based conversion of construction plans into structured data and automated bills of quantities.
Defense application: Rapid planning and construction of emergency infrastructure, bases, and field fortifications. - Eko Brick
Technology: Construction bricks made from recycled materials and industrial waste.
Defense application: Rapid construction and field shelters using locally available raw materials, including construction debris. - ReBeton
Technology: Concrete recycling and reuse of aggregates to create new structural elements.
Defense application: Restoration of damaged infrastructure and runways, and rapid construction of barriers from rubble. - HexAI Technologies
Technology: AI for quality inspection and model reliability assessment.
Defense application: Quality control in defense manufacturing lines and detection of defects in critical components. - Intelliate
Technology: Intelligence and data systems (assessment).
Defense application: Collection and analysis of information to produce a unified intelligence picture.
The broader direction is becoming clear: defense innovation is no longer the exclusive domain of large defense contractors, but an open ecosystem in which young companies play a central role in shaping future capabilities.
