Israeli Startups Make Global Plans After Key Role in War
The recent conflict between Israel and Hamas has significantly impacted various sectors, particularly the startup ecosystem focusing on military technology. One standout company, Xtend, has been highlighted as the producer of a drone that tracked and filmed the Hamas leader Yahya Sinwar during the intense warfare. This development is emblematic of how Israeli startups are seizing the moment to enhance their global presence in the defense sector.
Innovation Driven by Urgency
According to reports, many Israeli startups have received a boost from the urgent needs of the war effort following the deadly Hamas attacks on October 7, 2023. Aviv Shapira, co-founder and CEO of Xtend, remained tight-lipped regarding the specific applications of his company’s drones but confirmed that they provide indoor drones to the Israeli army. These UAVs leverage artificial intelligence for high-precision strikes and can be managed from nearly 5,600 miles away with minimal human oversight. As Shapira remarked, “We’re actually re-learning how to fight with robots.”
This reflects a broader trend where smaller, agile companies demonstrate that rapid innovation and deployment can be preferable to traditional design processes, which often take months or years. Military expert Isaac Ben-Israel noted that startups, characterized as groups of few people able to create solutions in just weeks, have become indispensable in crisis situations.
Financial Growth Amidst Conflict
Israel’s vibrant startup ecosystem positions it well to benefit from the current wartime boom. Xtend, for example, has secured a major contract with Israel’s defense ministry, raised $40 million in funding, and signed an $8.8 million contract with the U.S. government. Following the escalation of conflict, Sequoia Capital, a global venture capital powerhouse managing around $85 billion, resumed its investments in Israeli companies for the first time since 2016, highlighting the unique opportunities presented by wartime experiences.
The tech sector has long been a backbone of Israel’s economy, accounting for 16% of employment and contributing significantly to exports and tax revenues. In this climate, startups are stepping up to provide new capabilities to the Israel Defense Forces (IDF), with Colonel Nir Weingold emphasizing the collaboration between the defense ministry and startups to rapidly develop tools for the military.
A Surge in Contracts and Innovation
From October 7, 2023, to the end of 2024, the Israeli defense ministry has reportedly engaged with over 101 startups, awarding contracts totaling 782 million shekels (approximately $219 million). This collaboration has turned many projects from development to production at an alarming rate, with approximately half of the anti-drone technology used during the conflict originating from startups. This trend was also highlighted at the inaugural Global DefenseTech conference organized by the Directorate of Defense Research & Development (DDR&D), showcasing innovative solutions that caught the attention of multinational companies.
Investment and Strategic Partnerships
In a further demonstration of the war’s impact on the economy, companies like Thirdeye Systems, which specializes in advanced warning systems for attack drones, have rapidly evolved. Co-founder Lior Segal noted a shift from developmental contracts to obtaining substantial contracts since the war began, prompting their share prices to rise by 50%. Recently, Thirdeye announced the sale of a 30% stake to Emirati state-owned defense conglomerate EDGE for $10 million, marking a significant investment in Israeli technology.
This move is seen as an opening for Thirdeye to expand into new markets, contingent on approval from Israel’s defense ministry, reflecting the growing ties between Israeli and Emirati defense sectors, especially in the wake of their normalization of relations.
Conclusion
As Israeli startups like Xtend and Thirdeye Systems advance in the defense technology space, driven by the urgency of war, the trajectory for these companies remains promising. The combination of rapid innovation, international investment, and collaboration with military entities sets the stage for a transformation in both the Israeli economy and the global defense landscape. War may often induce hardships, but for these startups, it has become a catalyst for monumental growth and opportunity.