Israeli defense-tech start-ups working with the Defense Ministry raised nearly $3 billion in the first six months of 2026, according to figures presented at the Haifa DefenseTech Start-ups and Investors Forum.
The amount is three times the $1b. raised during 2025.
During the same period, defense-tech and dual-use companies accounted for almost 30% of the $8.4b. in private investment in Israel’s hi-tech sector. Approximately 800 start-ups are currently fulfilling direct procurement orders for the ministry.
The forum, held this week at EY’s Haifa office and organized by HiCenter Ventures, Gornitzky GNY, and EY, brought together entrepreneurs, investors, and officials from the defense industry and security establishment.
“Israel is rapidly transforming from a ‘Cyber Nation’ to a ‘Defense-Tech Nation,’” Ilana Averkin, head of Defense-Tech at HiCenter Ventures, was quoted as saying.
Nevertheless, she warned that start-ups should not try to build full end-to-end systems and compete with the primes, but rather “design the product as an independent, flexible, and agnostic component” that can be easily integrated into the platforms of defense giants like Lockheed Martin, Raytheon, or local players such as Israel Aerospace Industries (IAI), Elbit Systems, and Rafael Advanced Defense Systems.
Global crises increase demand for defense technologies
Global conflicts in Ukraine, the Persian Gulf, Lebanon, and Gaza have contributed to increased demand for defense technologies, including from Israel. Participants at the event cited the ability of Israeli companies to upgrade systems during active combat as a factor drawing interest from foreign customers.
Lior Hanuka, CEO of HiCenter Ventures, told the crowd that “following lessons from fighting in the Gaza Strip, in Lebanon, and in Ukraine, control of frequencies and the ability to disrupt GPS systems and drones has become a top investment priority.”
He added that “a great deal of money is being invested in AI that not only analyzes data but can make autonomous real-time decisions, such as automatic target prioritization, dynamic supply-chain management, and predicting failures in weapons systems.”
Primes have been cooperating with defense-tech companies around the world, and Dr. Moshe Shuker, senior vice president for Research and Development at Rafael, told the crowd that the company has “significantly expanded” its work with start-ups by integrating components and assemblies to broad collaborations on flagship systems.
“Rafael is one of the world’s leading defense industries, and it has set for itself the goal of being a significant pillar of Israel’s security through unique and groundbreaking innovation and technology,” he said. “In recent years, Rafael’s products have been at the technological forefront of defending Israel, and we do everything to ensure this continues.”
According to Shuker, by adapting the company’s activities in the defense-tech sector, “the connection between agile start-ups and established development bodies and defense industries makes it possible to significantly shorten the path from an idea to battlefield technology.”
Central industry
Hanuka said investment is increasingly directed toward software-based systems, including battlefield operating systems, encrypted cloud communications, and autonomous software for drones and robots. He also noted growing interest in AI for real-time decision-making and predictive maintenance.
“Products like battlefield operating systems, encrypted cloud communications, and autonomous software for drones and robots are achieving high valuations,” he said.
Adv. Ariel Sagee of Gornitzky said that government bodies, including the Israel Innovation Authority, the Defense Ministry, and the Directorate of Defense Research and Development (DDR&D), are taking a more proactive approach to supporting defense-tech companies.
“We are witnessing a fundamental shift in the way government authorities engage with the defense and technology sectors,” he said.
According to him, “organizations that were once viewed as highly bureaucratic, including the Israel Innovation Authority, the Defense Ministry, and especially DDR&D, are now taking a far more proactive approach. Their focus has shifted toward accelerating innovation, fostering collaboration, and removing barriers for companies operating in the sector.”
The numbers come shortly after a report by the Aaron Institute for Economic Policy at Reichman University found a sharp rise in the number of hi-tech employees in Israel, especially in the defense-tech sector. The report, which was quoted by Ynet, said that there were 424,000 workers in hi-tech, marking a 6.2% rise.
The increase in workers has led to a 32% jump in office space leased by defense companies in the first half of the year. According to the report by Colliers Israel, the three leading defense firms – Rafael, Elbit, and IAI – as well as defense-tech start-ups have leased more than 140,000 sq.m., compared with about 106,000 sq.m. in the second half of 2025.
Investment focus and regional development
While most companies are located in the center of Israel (around 80% according to data from the report), Hanan Markovitz, CEO of the Haifa Economic Corporation, said that strengthening Haifa and the North as a technological hub is important for national resilience and called for a national initiative to attract development centers and investment to the region.
“Israel cannot continue concentrating the best human and technological capital of the security establishment in the center of the country. Investment in Beersheba is welcome, but national resilience also requires a strong hub in Haifa and the North,” he said.
HiCenter Ventures was established by the Haifa Economic Corporation and the city of Haifa to support the local entrepreneurial ecosystem. Since 2021, it has supported and invested in 104 start-ups that have raised more than $300 million. Its investor hub, HiFund, includes about 1,200 investors and 300 strategic partners and investment entities.
In 2025, HiCenter invested in 24 start-ups, including 19 new portfolio companies and five follow-on rounds. Those companies raised about $90m. in additional funding during the year.
According to Averkin, HiCenter plans to invest in 10 defense-tech start-ups this year, and will assist companies with capital raising, proof-of-concept work, export licensing, and manufacturing.