High-tech reservists are returning from the battlefield with ideas for new startups, fueling a boom in Israel’s defense tech sector and drawing global investment interest.
Introduction: from the front lines to Silicon Valley
Israeli reserve soldier Ziv Bergerson felt he had to take action when he saw fellow troops forced to rely on their own eyes and ears to spot enemy drone swarms in the sky. So the 36-year-old high-tech professional developed a wearable device that uses mobile technology to warn forces of aerial threats. Like other reservists, Bergerson leveraged his civilian expertise and military experience to bolster Israel’s defense industry.
His startup, known as SkyHoop, has since emerged from stealth mode—a period where startups typically operate in secrecy—to be piloted in Ukraine with ongoing discussions for testing by the U.S. Department of Defense. As U.S. President Donald Trump mediates a ceasefire in Gaza, Israeli startups like Bergerson’s are attracting investments from U.S. and Israeli venture capital firms and looking to build on a growing European market for Israeli defense exports.
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A boom in defense startups
More than a third of all Israeli defense tech startups registered with Startup Nation Central, an organization tracking Israeli innovation, have been established since Hamas’s October 7, 2023 attack on Israel that ignited the Gaza war. The changing nature of warfare has driven shifts in defense procurement worldwide. Western militaries are demanding new technology tested in combat and refined by soldiers in the field. Roughly 20% of Israeli reservists work in the robust high-tech sector.
“Reservists are coming out of the battlefield and actually founding new companies to solve real problems they encountered in real time on the battlefield,” said Letal Lechem, an Israeli reserve soldier who co-founded Protego Ventures in December. Lechem, whose fund has raised about $100 million, expects the fund to invest in about four companies by the end of the year.
Eyes on Europe
Israeli startups hope to capitalize on Trump’s demand that European nations shoulder more of their continent’s defense burden rather than the United States. Under a new NATO defense spending plan, nations will spend 5% of GDP—up from 2%—on defense. Such an increase would mean hundreds of billions of dollars in additional defense spending.
Israeli defense exports reached a record $14.8 billion in 2024, according to Defense Ministry figures released last month, with exports to Europe accounting for more than 50% of those sales, up from 35% in 2023. “When a party buys, in the end, they want to buy the best product possible,” said retired Brigadier General Yair Kulas, head of the Defense Ministry’s International Defense Cooperation Directorate.
Political challenges
Despite this growth, significant political challenges remain. Kulas noted that the global political backlash is concerning because, on one hand, Israel’s innovation is pioneering and world-class, but on the other hand, there has been “the delegitimization of Israel.” More than 57,000 Palestinians, mostly civilians, have been killed according to local health officials in the 21 months since Israel launched its offensive on Gaza, displacing the population and leaving the territory in ruins.
Kulas told Reuters, “I don’t know how that will affect results in 2025,” adding that it is “certainly a significant challenge.”
Conclusion: a wartime technological revolution
Avi Hasson of Startup Nation Central said the surge of new defense startups created by reservists is reminiscent of a technological revolution 20 years ago that later evolved into smartphones. These startups could prompt major Israeli defense companies like Elbit, Rafael, and Israel Aerospace Industries to seek acquisitions of more Israeli startups and help scale them or develop their own technology at a faster pace. Hasson said, “We are now in a different world.”
