Israel backs two funds to grow new defence tech
Adir is managed by Idan Financial Instruments and Sling is led by Giza Venture Capital.
(The Times of Israel) Israel will provide state guarantees to two venture capital funds to bring private money into military start-ups and reduce its reliance on foreign suppliers.
The Finance Ministry and the Defence Ministry’s Directorate of Defence Research and Development (DDR&D) chose Adir Capital and Sling Capital after a tender.
Adir is managed by Idan Financial Instruments and Sling is led by Giza Venture Capital.
Each fund will receive NIS 100 million ($47 million) in state guarantees.
The guarantees protect investors against losses in a sector considered high risk.
Adir has appointed Major General (res.) Mishel Yanko, the IDF’s former head of technology and logistics as its chairman.
Each fund must raise at least $US150 million ($215 million)over the next six to 12 months.
The government hopes the guarantees will attract local and foreign investors and lift each fund to between $US300 million and $US350 million.
Defence Ministry director-general Amir Baram said that after three years of war, Israel needed to increase spending on research and development to keep its strategic edge and produce the next generation of technological “surprises”.
Half of the money will go to companies working purely in defence, rather than in dual-use technology that also has civilian applications.
Companies will be screened together with the DDR&D, known in Hebrew as Mafat, to match military needs, and their products may later be sold overseas.
Investment areas include weapons components, drones, low-cost autonomous systems, electronic warfare and navigation, and dual-use supply-chain technology.
Adir plans to put about 20 per cent of its capital into early-stage companies and 80 per cent into growth companies that already have proven defence products.
The scheme is modelled on Yozma, the government program of the 1990s that helped build Israel’s venture capital industry and its start-up boom.
The war that began with Hamas’s October 7, 2023, attack has produced a wave of defence start-ups, many founded by reservists returning from the front.
Battlefield demands have shifted towards systems that can be built and replaced in months rather than years.
The move comes as NATO members have committed to lifting defence spending to five per cent of GDP, while some European governments have cancelled deals with Israeli arms makers and pushed for sanctions over the Gaza war.
Israel’s defence industry has long been dominated by Rafael, Israel Aerospace Industries and Elbit Systems.
According to Startup Nation Central, the country now has more than 334 defence tech start-ups and firms.