19 deep commitment and robust presence in the target markets, developing maintenance and manufacturing capabilities in those markets, and potentially even investing in R&D outside of Israel.” It is critical to grasp the importance of licenses. Pearl Cohen’s Anna indicates: “As legal advisors our goal is to assist Israeli defense companies in making the sale with all required licenses and permits and most importantly, as the Israeli security industry often has shorter time-to-field, we need to make sure that the Israeli companies understand and are covered as per the liabilities and exposures resulting from such shorter time-to-field factor (e.g. field testing, operational use, export risks).” Funding requires true partnership High-Tech partner at Shibolet, Einat Weidberg underlines the funding challenges. “Israel’s defense startups continue to struggle with finding funding sources, particularly in their early stages, and face challenges regarding expected exit opportunities. For many of them, their main clients are local clients, including the Israeli Ministry of Defense and the main Israeli defense corporations.” In September 2025, Israel’s Ministry of Finance and Ministry of Defense (DDR&D) proposed a USD 60 million state guarantee to establish venture capital funds dedicated to advanced defense technologies. The initiative aims to strengthen Israel’s industrial and security base, stimulate innovation, and generate jobs. It seeks to close the funding gap in high-risk defense sectors while fostering collaboration between the defense establishment, entrepreneurs, and tech firms - cementing Israel as a global leader in defense-tech. Elsewhere, VC fund, Protego Ventures, which is set to focus exclusively on investments in military technologies, secured USD70 million in investment commitments within just two weeks of its December 2024 launch. Calcalist also reported in June that another new VC fund focused on defense-tech, Kinetica, was raising USD 150 million. But while the State is now recognizing that traditional large defense corporations alone cannot sustain the country’s technological edge, Itamar Lev Eldar, partner at ERM, points out in a recent Calcalist article that this funding move addresses only the tip of a much larger structural challenge.
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