From prototype to combat in 90 minutes: Why Israel’s defense tech innovation outpaces U.S.

By David Yahid, The CET Sandbox.

In a single year, Israel’s defense tech startup landscape has nearly doubled. In 2024, there were 160 defense-related startups. Today, that number stands at 312 - a 95% growth rate that far outpaces the US (17%) and the UK (20%) in the same timeframe.

This is not a fluke, nor is it a purely war-driven phenomenon. Ukraine, after all, has been at war far longer and does not appear in the top five nations for defense startup growth.

Israel’s rapid acceleration stems from a unique combination of cultural, geographic, and operational conditions that creates a perfect storm for defense innovation. And for US defense Venture Capitals (VCs), government stakeholders, and military decision-makers, there is much to learn, and much to gain, from tapping into this ecosystem.

From startup nation to battlefield nation

Israel has long been known as the “Startup Nation,” producing more startups per capita than any other country, along with a disproportionate number of unicorns, exits, and VC funding rounds. But over the past year, that tech engine has collided with the frontlines.

Quite literally.

What happens when you drop Silicon Valley into Kandahar? That’s what Israel has been living through since October 2023. The result: CTOs, engineers, product managers, and UX designers, many of whom built Israel’s most successful startups, found themselves mobilized into uniform and deployed to active combat zones. These individuals didn’t just witness the operational gaps on the battlefield.

They lived them.

In most countries, defense innovation begins with a soldier’s pain point being translated (often poorly) up a long chain to a civilian R&D team that’s never worn a uniform.

In Israel, the soldier is the R&D team. The result is a bottom-up innovation model where solutions are born from immediate necessity, real-time feedback, and first-hand experience.

Field-tested by friction

Even those not on the frontlines have felt the impact. Amid the military’s ongoing jamming of GPS signals across the country, part of efforts to confuse hostile missile guidance systems, civilians in Tel Aviv found their Waze rerouting them through Beirut, Amman, or Damascus. While most found this frustrating, Israel’s startup ecosystem saw this as an opportunity.

Suddenly, the entire country became a live testbed for GPS-denied navigation systems. Companies working on autonomy, anti-jamming technologies, and sensor fusion found themselves with an unprecedented real-world lab.

This kind of widespread exposure to battlefield-like conditions is unheard of elsewhere, and it’s one of the underappreciated accelerants of the Israeli defense tech boom.

From prototype to combat in 90 minutes

Nowhere is Israel’s edge more apparent than in the astonishing speed at which startups move from prototype to battlefield validation.

In one instance, a founder loaded several devices into the trunk of his car and drove 90 minutes south to deliver them to a unit commander, a personal friend, on active duty.

The next day, the devices were in use. In another case, a startup handed a pre-loaded Android phone to a special ops unit, equipped with software that collected anonymous radio frequency and signal data — yielding insights typically locked behind months of red tape elsewhere.

This kind of access is possible because of the dense social fabric of Israel’s military reserves. Entrepreneurs aren’t just former soldiers; they’re still connected to active units, commanders, and frontline operations. This grants them a level of agility and immediacy no other country currently enjoys.

Additionally, Israel has been engaged simultaneously on multiple fronts, from dense urban combat to mountainous terrain and open desert, and facing adversaries equipped with Russian, Chinese, Iranian, and even US-supplied tech. The diversity of environments and threats means Israeli technologies are being stress-tested across nearly every combat condition modern militaries care about.

Global investors are taking note

The momentum hasn’t gone unnoticed.

Global venture capital is flowing into Israeli defense startups at an unprecedented rate. US and international funds are backing Israeli teams with the same intensity once reserved for cybersecurity or fintech.

In fact, Line 5, a next-generation battlefield platform startup, recently raised $20 million in seed funding, one of the largest defense tech seed rounds globally. Similarly, Kela Technologies, another Israeli-founded firm, has reportedly raised close to $100 million across multiple rounds backed by top-tier investors including Sequoia Capital, Lux Capital, and In-Q-Tel.

Others, like Xtend and Exodigo, have secured tens of millions while already engaging with US defense and intelligence agencies.

These funding rounds reflect growing international confidence not only in Israel’s operational edge but also in its commercial viability in allied defense markets, including the US and NATO countries.

Not just innovation, It’s mission completion

Israel’s defense tech boom isn’t driven solely by ambition or market opportunity. It’s driven by a mission mindset.

These aren’t just entrepreneurs. They are mission-oriented individuals with military training, people who are hardwired to see failure as unacceptable, timelines as non-negotiable, and iteration as a requirement, not a luxury. In a sector where the cost of delay can be counted in lives, this ethos matters.

And it’s paying off. In categories like AI-driven autonomy, sensor fusion, communications, battlefield logistics, anti-drone systems, and next-generation soldier tech, Israeli startups are already punching well above their weight, often with solutions that are cheaper, faster to deploy, and better aligned with battlefield realities than their US or European counterparts.

A call to U.S. investors and decision-makers

The defense tech sector is no longer niche. As NATO nations boost their defense budgets, the US shifts military spending inward, and global conflicts become more asymmetric and tech-driven, defense innovation is emerging as the next frontier of venture and strategic investment.

Israel is well-positioned to lead. It has already done so in cybersecurity, medical innovation, and AI. The defense sector is next, and arguably, more vital than any of the others.

For US defense VCs, the Department of Defense, DIU, and other government agencies, now is the time to deepen ties with the Israeli ecosystem. This means more co-development agreements, faster procurement pathways, and deliberate investment into the startups solving tomorrow’s battlefield challenges today.

There is no time to waste. The battlefield is evolving faster than the bureaucracy can handle. Fortunately, the solutions are already being built and only 90 minutes from the frontline.