"Israeli entrepreneurs have an opportunity to lead in defense technologies"
"Israeli entrepreneurs have an opportunity to lead in defense technologies"
Ahead of Calcalist and Poalim Tech’s Roadshow+ event, Michal Kissos Hertzog, CEO of Poalim Tech, stated that in the wake of the war, Israel is once again taking the lead in defense entrepreneurship. Kobi Samboursky, founder and managing partner of Glilot Capital, added, "Those who need cybersecurity will not boycott Israeli companies."
The ongoing threat and new reality facing the local tech industry since the outbreak of the Gaza war have caused significant upheaval among entrepreneurs and investors alike. Amid security threats and economic uncertainty, high-tech entrepreneurs are grappling with unprecedented challenges. How should entrepreneurs navigate a time when personal and economic security are more uncertain than ever?
"The war poses significant challenges to the local tech industry and creates uncertainty that makes it difficult for companies to operate, while also alienating investors," said Michal Kissos Hertzog, CEO of Poalim Tech, in an interview ahead of Calcalist's Roadshow+ event, held in cooperation with Poalim Tech. "However, there is also an opportunity in a field where Israel can once again lead—defense technology. A prime example is the impressive fundraising round of the American company Anduril, which recently raised $1.5 billion—a record in defense technology investment. This signals an interesting shift in the funds' interest in a field that once faced cultural and political challenges."
1 View gallery
From left: Amit Pilowsky, Michal Kissos Hertzog, Kobi Samboursky, Rona Segev
(Tommy Harpaz, Rotem Ann Pearl)
The Roadshow+ event, taking place on November 25 (by invitation only), connects companies in the pre-Seed stages up to the Series A round with top investors in Israel. The aim is to provide selected entrepreneurs a concentrated series of one-on-one meetings with partners from leading venture capital funds in Israel.
Kissos Hertzog also noted that, according to recent reports, startups in the defense technology field globally have raised $2.5 billion in 2024—nearly reaching the record value of 2022. "In the past, combining defense technology with venture capital wasn’t always successful. Some investors avoided such investments due to moral concerns or pressure from stakeholders. Technology companies, too, were hesitant to cooperate with the military, as seen in 2018 with Google’s Maven project. However, in the last decade, venture capital has grown significantly, and investors are now exploring new areas. The lines between defense technology and fields like artificial intelligence and cybersecurity are blurring, and as a result, more funds are opening up to innovative financing in defense tech. This presents an incredible opportunity for Israeli entrepreneurs working in this field."
"Now is precisely the time to appeal to decision-makers and emphasize that human capital is Israel's most valuable resource—particularly in tech. Israel has always been a source of entrepreneurship and innovation, but we must actively ensure it stays that way. The costs we are paying today due to the war, social disparities, and the economic situation are very high."
Reach customers, don't wait
Kobi Samboursky, founder and managing partner of Glilot Capital, pointed to the cyber industry as a stronghold of Israeli high-tech. "The Israeli brand in cyber is so strong that it's become a non-issue for companies to buy from Israeli firms, even in times like these. If you want cybersecurity, you almost always have to work with Israeli companies. It’s like loving pasta—you won’t boycott Italian pasta just because of its origin. Similarly, the cyber world recognizes that Israeli companies are a part of the package, and that's accepted."
Samboursky identified reduced flights to and from Israel as a key challenge, but said, "The industry’s response has been amazing. I've seen almost no damage, and I think this is partly due to the pandemic, which got us used to conducting business remotely. What we’re doing now is reaching out to customers as much as possible, rather than waiting for them to come to us."
His main advice for entrepreneurs is: "Travel as much as possible, even if it’s inconvenient. Also, avoid discussing the situation in Israel—say everything is fine and get back to business. The goal is for the other party to see that your product is the best and to want to buy it."
Impact on foreigners
"In our portfolio, we haven’t seen a negative impact from the war on our companies," said Rona Segev, co-founder of TLV Partners. "It’s true that some employees are in reserve duty, but the percentages are relatively low. Capital raising was at a low point in 2023, but despite the war, we’ve seen a significant recovery in 2024, with many more follow-on rounds. All companies have developed emergency plans for power outages or communication disruptions, but fortunately, those plans remain unused. In fact, this year, we’ve seen a significant increase in sales for most companies, along with healthy growth in both revenues and personnel recruitment."
Regarding the impact of the war on capital raising and international investments, Segev added, "Investments in Israel have increased significantly since the start of the year. It seems that international investors believe Israeli high-tech is resilient to local events. High-tech is, of course, affected by global trends, and when there’s a global economic downturn, it’s felt acutely in Israel too. But surprisingly, local circumstances, even a regional war, hardly affect foreign investors. Not only have we not seen investors lose interest, but continued investment in our portfolio companies has risen this year compared to last. The image of Israeli companies remains strong—characterized by exceptional entrepreneurs and cutting-edge technology."
The valuable resource: Entrepreneurship
"If any industry is built to handle extreme situations like war, it’s Israeli high-tech," said Amit Pilowsky, managing partner at Key1 Capital. "The war has a dramatic impact on the entire Israeli economy, but the key question is whether Israeli high-tech is proving resilient, and the answer is a resounding yes. That’s crucial because a different outcome would signal a significant setback for the entire economy."
According to Pilowsky, the entrepreneurial spirit of the tech industry, which operates in a state of constant uncertainty, frequent crises, and demands for quick, creative solutions, is what enables it to thrive.
Regarding investments, Pilowsky said, "An economy at war isn’t attractive—that’s a known global fact, not specific to Israel. Investors already involved in Israeli high-tech continue to support companies, not out of Zionism, but because of the innovation, technology, and extraordinary entrepreneurship here. Those considering new or expanded investments in Israel are naturally more cautious. We should also note that there is a global decline in high-tech investments."
He concluded, "Looking at the data helps illustrate investor confidence in Israeli tech. Despite the war, total investments have increased by 6% compared to the same period last year. Several companies, such as Wiz and BioCatch, raised significant funds, and the cybersecurity sector has been particularly active. In terms of exits, global players, including public companies, have been purchasing Israeli startups at a higher rate than last year—an 11% increase. I believe that once a ceasefire is reached, we’ll see the return of investors currently on the sidelines, provided Israel’s regulatory, legal, and economic environment remains stable. Bottom line, Israel has a valuable resource that’s always in demand: entrepreneurship, innovation, and technology. There will always be a market for that, even if the war makes things challenging for now."
