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As Israel experiences both geopolitical tension and technological acceleration, venture capital interest in the country’s defense and dual-use sectors is growing rapidly. In a conversation JPost's Defense and Tech editor Anna Ahronheim, Ezra Gardner, co-founder at Varana Capital, explained how his firm has shifted its strategy to meet the moment. “This is not just a temporary reaction,” Gardner said, “We’re seeing a long-term structural change in how capital flows into Israeli innovation, especially where defense tech overlaps with civilian applications.”
October 7 fallout
Gardner, who has been investing in Israel for over 15 years, noted that the October 7 attack and subsequent conflict pushed many local companies to pivot quickly toward defense solutions. Technologies that were once considered too controversial for civilian-focused VCs, such as autonomous systems, military-grade sensors and AI-driven defense platforms, are now drawing global investor attention. “What was once taboo is now essential,” he said. “There’s a clear demand for scalable, cost-effective systems that don’t just serve Israel, but have global export potential.”
Looking ahead, Gardner believes the future lies in smart scaling: systems that are “good enough” to deploy quickly and affordably, rather than elite technologies that are too expensive to scale. He referenced recent IDF thinking around balancing excellence and efficiency, not aiming for perfection, but for readiness. “Israeli companies are uniquely positioned to lead this shift,” he said, “because they innovate under pressure.” As Varana Capital increases its footprint in Israel, Gardner emphasized the resilience and creativity of the local ecosystem, even amid ongoing uncertainty.