This post is also available in:
עברית (Hebrew)
In recent years, the global system has experienced growing regional and international tension, driving many countries to seek solutions that ensure intelligence and operational superiority. Against this backdrop, advanced defense technologies — especially those based on artificial intelligence, sophisticated sensors, and automation — have become a central focus for investors and governments alike.
The problem is clear: militaries must adapt to faster development cycles, more complex threats, and the need for precise, safe responses under rapidly changing conditions. Traditional defense development models, built on long processes and costly infrastructure, can no longer keep pace. Countries are therefore seeking modular, rapid, and innovative solutions — and Israel is delivering exactly that.
The data reflects a significant shift in investment volume in the Israeli defense-tech sector: by the end of November, approximately $436 million had flowed into local defense-tech startups — exceeding even peak years like 2021. This marks a dramatic rise compared with previous years: a 193% increase over 2022, a 524% surge compared with 2023, and a 142% rise compared with 2024. In parallel, investors purchased an additional $1.3 billion worth of shares and bonds from Israeli defense companies.
The accelerated shift toward advanced technologies is also evident in government activity. The Ministry of Defense has significantly expanded investment in innovative technologies: from just 100 million shekels before October 2023 to 1.2 billion shekels in 2024, in collaboration with roughly 300 startups — many of which were integrated into real-time operational processes. This sharp increase reflects the urgent need for flexible, software-driven and AI-based capabilities that can be rapidly embedded into existing systems.
The investment boom is not limited to large organizations. Today, Israel is home to 384 defense-tech companies, including 106 in early development stages and 167 already generating revenue, while 14 have grown into international corporations. This diversity shows that the field is not reserved for major defense manufacturers alone, but is part of a broader innovation ecosystem that includes small ventures and experimental solutions.
Despite the impressive rise, the share of local developments remains relatively small compared with global defense budgets, which totaled $2.7 trillion in 2024. However, investment trends indicate that Israel is strengthening its position as an innovation hub with the potential to influence the international defense industry.
