Israel’s defense-tech ecosystem is undergoing one of the most significant transformations in its history.
For decades, Israel's three major defense contractors developed everything from missiles and radar systems to satellites and armored vehicle protection, while the Israel Defense Forces (IDF) served as both customer and proving ground.
It was a tightly held domain that has increasingly expanded into a sprawling, multilayered innovation network of start-ups, research centers, dual-use technology companies, and military-industry partnerships that are building technologies that are redefining how wars are fought.
The ecosystem’s rise comes at a moment when global demand for advanced defense technology is surging. Israel’s defense-tech landscape is not only reshaping the country’s security posture but also redefining its economic trajectory, industrial priorities, and global influence.
Unlike many countries where defense innovation is concentrated within a handful of large contractors, Israel's ecosystem has always been closely connected to its broader technology sector. Engineers frequently move between military service, commercial start-ups, and established defense companies, carrying operational knowledge with them.
Rather than competing with Israel's established defense primes, the start-up companies are increasingly becoming partners, supplying niche technologies that can be integrated into larger weapon systems or rapidly deployed to meet emerging operational requirements.
This start-up culture has become particularly important as warfare itself changes.
The proliferation of inexpensive unmanned aircraft, artificial intelligence (AI), electronic warfare (EW), and software-defined operations has lowered barriers to innovation. Modern militaries increasingly require software updates measured in weeks rather than hardware upgrades measured in decades. Israeli start-ups, accustomed to rapid product iteration, are well positioned to deliver those capabilities.
Yet the country's established defense contractors remain indispensable.
The backbone of the ecosystem
Israel Aerospace Industries-IAI, Rafael Advanced Defense Systems, and Elbit Systems continue to anchor Israel's defense industry, providing manufacturing capacity, systems integration, global supply chains, and decades of engineering expertise that few start-ups could replicate.
IAI, the country’s largest defense contractor, has been long regarded as Israel's aerospace powerhouse. It combines satellite manufacturing, UAV development and manufacturing, missile defense, and intelligence systems under one organization. Its solutions have been central during the last three years of multifront war that Israel has been fighting – from its Arrow defense system that has intercepted countless Iranian missile barrages to its UAVs striking targets far from the country’s borders.
IAI’s growing collaboration with smaller companies, particularly in autonomous systems and AI-driven mission management, shows how even the largest players are adapting to a more distributed innovation model.
“We are always trying to look two generations ahead. We don’t have the luxury to wake up one morning and have something ready the next day; we look for the answers decades ahead of time,” Boaz Levy, chairman of IAI, told Defense & Tech by The Jerusalem Post in an interview.
Rafael remains synonymous with layered air defense. The company's role in developing the Iron Dome and the Iron Beam directed energy system has made it one of the world's most recognized missile defense companies. The company has repeatedly produced the technologies that redefine Israel’s strategic posture. The Trophy Active Protection System, Spike missiles, advanced electro-optics, and cutting-edge EW systems have all emerged from Rafael’s labs.
According to foreign reports, Rafael’s Spike missiles were one of the platforms used to destroy Iranian ballistic missiles and their launchers in the opening round of Operation Rising Lion in June 2025.
But Rafael's strategy increasingly extends beyond internal research. The company has expanded collaboration with younger firms developing AI-enabled targeting, advanced sensing, and autonomous capabilities, recognizing that software innovation often occurs faster outside traditional corporate structures.
Elbit Systems, meanwhile, has evolved into one of the world's most diversified defense technology companies. Rather than specializing in one domain, the company built a portfolio that spans air, land, sea, cyber, EW, and C4I. This breadth gives the company a unique vantage point – it sees how technologies intersect, how operational needs evolve, and where gaps emerge.
One of its most influential contributions to Israel’s defense-tech identity is its work on soldier modernization. Its soldier systems are used by militaries around the world, but their influence inside Israel is even more profound. They shape how the IDF trains, fights, and adapts to new threats. And they create a natural bridge to start-ups working on computer vision, autonomy, and electro-optics, many of which build technologies that plug directly into Elbit’s soldier ecosystem.
Elbit is one of Israel’s most successful defense exporters, with customers in more than 30 countries. Its relationships with foreign militaries allow it to identify emerging global needs and feed that intelligence back into Israel’s innovation ecosystem.
Together, the three companies remain the industrial backbone of Israeli defense. Yet these primes no longer operate in isolation. They are increasingly intertwined with start-ups that bring agility, software expertise, and fresh operational perspectives.
Winning the drone war
Few technologies illustrate Israel's innovation ecosystem better than autonomous aerial systems.
The country has been a pioneer in unmanned aircraft for decades but today a new generation of companies is pushing autonomy beyond surveillance into logistics, maneuver, and collaborative operations.
Aeronautics, now part of Rafael, continues to expand its portfolio of tactical unmanned systems, providing intelligence, surveillance, and reconnaissance (ISR) capabilities for military customers around the world. Its integration into Rafael also demonstrates another defining characteristic of Israel's ecosystem: Promising companies often become part of larger industrial groups while retaining their innovative culture.
A different approach comes from XTEND, whose intuitive operating systems enable personnel to control drones in complex environments with minimal training.
Founded in 2018 by Aviv Shapira, Matteo Shapira, Rubi Liani, and Adir Tubi as a gaming company, since October 7, the company has shifted its focus to specialize in human-guided autonomous machine systems for defense applications. The company has gained international recognition for combining immersive control technologies with autonomous capabilities, allowing operators to conduct reconnaissance, inspect hazardous locations, or perform tactical missions while remaining outside immediate danger.
The company’s platforms have been used in the Israel-Hamas War, Operation Rising Lion, and during the deadly earthquake in Venezuela. “Other companies are still testing their products, but we are proving ours during wartime,” Aviv Shapira told D&T.
Aero Sentinel, a boutique Israeli drone manufacturer specializing in covert intelligence-gathering drones, is rapidly gaining traction among elite military units and international customers. The platforms are short- and medium-range drones that are optimized for tactical operations, border patrol, and other sensitive surveillance and reconnaissance (ISR) missions.
The platforms are built for environments where traditional drones struggle, such as GPS-denied zones, urban canyons, or areas saturated with RF interference, where many UAVs lose stability or fail entirely. Aero Sentinel’s systems are engineered to adapt, relying on multisensor fusion and onboard decision-making to maintain flight integrity.
The company’s platforms were used in covert missions during Operation Rising Lion, and its headquarters were struck by an Iranian ballistic missile during Operation Roaring Lion.
“The fact that we were targeted as a high-value strategic objective speaks for itself. It reflects the quality, relevance, and operational importance of the systems we provide,” the company told D&T.
C-UAS
As low-cost drones become an increasingly common feature of modern battlefields, systems that improve infantry effectiveness without requiring entirely new weapons have attracted growing international attention.
Conflicts around the world have demonstrated how inexpensive unmanned aircraft can conduct reconnaissance, deliver precision strikes, disrupt logistics, and overwhelm traditional air defense systems. Their widespread use has created an equally urgent demand for technologies capable of detecting, identifying, and defeating them.
Israel has responded by developing one of the world's most diverse counter-UAS industries.
D-Fend’s flagship technology uses cyber-based takeover methods to safely control hostile drones without jamming or kinetic fire. This approach is increasingly favored in civilian environments where collateral damage is unacceptable.
Founded in 2017 in the garage of CEO and chairman Zohar Halachmi, along with CTO and vice president Assaf Monsa and chief product officer and president Yaniv Benbenisti, the software-driven company has built its reputation on the simple but demanding premise of neutralizing rogue drones cleanly, quietly, and without jamming half the city or blowing anything out of the sky.
“Commercialized drones or the DIY ones are causing 90% of the incidents… Small drones can be very problematic,” Halachmi told D&T. “This is a sensitive, surgical system.”
Sentrycs pursued a similarly sophisticated strategy. Instead of relying primarily on radar or kinetic defeat, its systems analyze communication protocols between drones and their operators, enabling precise detection and disruption while minimizing interference with nearby wireless networks.
The company provides militaries and civilian infrastructure such as airports and even sporting events like FIFA World Cup with the ability to classify drones in real time. Its systems distinguish between friendly and hostile UAS, which is a critical capability as drone usage expands.
In November 2025, the company was acquired by the American defense conglomerate Ondas Holdings in a deal valued at approximately $224.6 million. The acquisition combined Sentrycs’s cyber-over-RF technology with Ondas’s broader autonomous systems, creating a more comprehensive layered solution for military, homeland security, and critical infrastructure customers worldwide.
Meanwhile, SmartShooter has approached the drone challenge from the perspective of the soldier on the ground. Its fire-control technologies combine electro-optics, computer vision, and target tracking to increase the probability of successfully engaging small aerial threats.
“Part of the beauty is that we can use the same core technology for different applications. We can continuously upgrade the software and provide it on various platforms in our broad portfolio,” Shir Ahuvia, VP of product told D&T. “That’s the magic.”
Seeing more, seeing less
Information has always been a decisive military advantage, but the challenge today is not collecting data – it’s processing it quickly enough to support operational decisions. Electro-optical technologies remain one of Israel's greatest strengths, supported by decades of expertise in sensors, thermal imaging, laser systems, and advanced optics.
Asio Technologies has specialized in portable situational-awareness solutions that combine navigation, mapping, and sensor fusion for military and security forces operating in complex terrain. These systems enable dismounted personnel to understand their surroundings more effectively while reducing reliance on traditional GPS navigation alone.
Its battle-hardened and operationally proven technology has been in the hands of IDF troops and commanders for close to a decade, allowing the company to provide the necessary upgrades and changes for troops in the field.
“We focus on bringing innovation so that troops can do their work and be tactically independent,” CEO Tomer Malchi told D&T, adding that the company’s goal is to “make their day-to-day life on the battlefield clearer. We want to deliver the right amount of data, without any overkill.”
SpectralX represents the growing role of advanced imaging and artificial intelligence in modern defense sensing. The company develops technologies focused on analyzing complex visual data and extracting actionable intelligence from sensor inputs.
As militaries collect increasing volumes of imagery from drones, cameras, and other platforms, the ability to rapidly interpret that information has become as important as the sensors themselves.
“The main challenge is finding the right balance between stealth, movement, and protection,” Asaf Picciotto told D&T. “We deny detection on the battlefield.”
ThirdEye Systems develops thermal imaging and advanced vision technologies designed to improve detection under low-visibility conditions. As militaries increasingly operate around the clock and across diverse environments, demand for sophisticated electro-optical sensing continues to grow.
The rise of defense AI
Few technologies have altered the battlefield more rapidly than AI. If the last era of defense innovation was defined by hardware, the next is defined by software. And Israel’s defense-AI sector is one of the fastest growing in the world.
Kela’s AI-driven intelligence platforms fuse data from multiple sources to identify threats, track adversaries, and support operational planning. In an age where information overload can paralyze decision-making, Kela’s systems provide clarity at machine speed. Its tools are used globally for counterterrorism, border security, and cyber-intelligence operations.
Kela’s systems are engineered to be flexible, mobile, and operable by a single soldier, an approach shaped by the lessons of October 7, which underscored the need for rapid-response capabilities and seamless integration with advanced sensors. The company’s platforms are designed to incorporate both civilian and military technologies without dependence on a single manufacturer or the need to replace existing infrastructure.
Axon Vision specializes in automatic target recognition and situational awareness for armored vehicles and ground forces. Its AI systems classify threats in real time, giving soldiers the ability to process complex environments faster than human cognition alone allows. The company provides AI-driven computer vision and situational awareness solutions for defense and security applications. Its EDGE ClearSky solution supports rapid detection and identification of aerial threats through thermal sensing and AI-driven real-time processing.
Built on an open, platform-agnostic architecture, Axon Vision solutions integrate sensors and effectors across existing military platforms. The systems are integrated onto platforms of various militaries around the world, including the IDF, through partnerships with multinational defense companies.
Airwayz builds AI-powered UAS traffic management systems that allow multiple drones to operate autonomously in shared airspace. Its technology enables coordinated missions, swarm behavior, and safe integration with manned aircraft.
“OVERWATCH brings the ability to control the airspace, to understand which aircraft flies where and where to broadcast, like a control tower,” Airwayz CEO Eyal Zor told D&T. “The chaotic environment of drones in the lower skies – from 400 feet or 7,000 feet – showed us the outcome of non-controlled airspace and the missed potential to utilize drones. The new airspace control is all about drones and autonomous systems.”
As drone usage expands, Airwayz’s systems are becoming essential for both military and civilian operations.
EW & RF: The invisible battlefield
If drones have become the most visible symbols of modern warfare, the electromagnetic spectrum has become one of its least visible but most fiercely contested domains. Protecting communications, disrupting enemy networks, detecting radio-frequency (RF) emissions, and enabling resilient command-and-control systems are now essential functions across every branch of modern militaries.
Tenna Systems is one of Israel’s emerging leaders in RF analytics, spectrum monitoring, and EW support tools. Its technology helps militaries detect, classify, and respond to electronic threats in real time.
Originally founded as Tip & Cue Inc. just months before the October 7, 2023, massacre in southern Israel, Tenna Systems aims to build the world’s first dynamic, unified map of the electromagnetic spectrum. Its battlefield-tested software is designed to safeguard wireless-dependent systems across defense, aerospace, and mobility sectors – domains where connectivity has become both indispensable and dangerously vulnerable.
“For semi-autonomous systems, drones, munitions, maritime autonomous systems, ISR systems, and more, connectivity is their lifeline,” Tenna CEO Avner Bendheim told D&T. “We can’t afford to be blind.”
Ground robotics: the next frontier
While aerial drones dominate headlines, ground robotics is quietly becoming another important area of innovation. Modern armed forces face growing demand for unmanned systems capable of conducting reconnaissance, transporting equipment, inspecting hazardous environments, and supporting soldiers in contested terrain.
Robotican develops autonomous aerial and ground robotic systems designed for military, homeland security, and industrial applications. Its portfolio spans hybrid aerial-ground drones, unmanned ground vehicles, autonomous interceptors, and advanced simulation tools used for training and research.
The company’s technologies emphasize operational flexibility, allowing unmanned platforms to function in environments where conventional vehicles may face significant risks.
“It’s the era of robots,” Robotican CEO Hagai Balshai told D&T.
Shifters is emerging as one of Israel’s most promising ground-autonomy companies, building rugged unmanned vehicles designed to patrol borders, secure critical infrastructure, and operate in terrain where human presence is risky or resource-intensive. Its robots navigate complex environments using multisensor fusion, real-time obstacle detection, and GPS-denied autonomy – capabilities that make them reliable in the kinds of contested zones where traditional UGVs struggle.
Shifters’ main solutions are TRUST – Tactical Robot for Unmanned Safety & Security Tasks – a family of rugged AI-native autonomous quadruped robots, and RITA – Robotic Intent to Action – a software stack that powers TRUST with four layers: locomotion, navigation, perception, and action.
“The first asset into a dangerous environment should increasingly be a robot, not a person,” CEO Ofer Ballin told D&T.
Looking down from space
Israel's defense ecosystem extends well beyond the atmosphere. Satellite imagery, communications, and space-based intelligence have become indispensable components of modern military operations, supporting everything from strategic planning to disaster response.
ImageSat International specializes in satellite imagery and geospatial intelligence services, delivering analytical products that assist governments and commercial organizations in monitoring developments around the world.
High-resolution imagery, combined with increasingly sophisticated analytics, enables decision-makers to identify changes, monitor infrastructure, and support intelligence assessments with greater speed. Operating high-resolution imaging satellites and providing intelligence services to governments and commercial clients, its capabilities give Israel strategic reach far beyond its borders.
Orbit Technologies, meanwhile, develops advanced communications systems for maritime, airborne, and satellite applications. As military operations become increasingly networked across domains, secure and reliable communications remain essential to ensuring that information collected from space can be transmitted rapidly to commanders on the ground.
The continued expansion of commercial space capabilities also reflects another defining trend: Technologies once reserved for major governments are increasingly being developed by agile private companies capable of serving both defense and civilian customers.
The next chapter of Israel's defense industry
The rise of Israel's defense-tech ecosystem is not simply a story about start-ups. It’s about how an established defense industry has adapted to a rapidly changing technological landscape.
Rather than replacing the legacy primes, the start-ups are expanding the country's innovation capacity. The primes continue to provide manufacturing expertise, certification, systems integration, and global customer relationships, while start-ups contribute speed, software, and highly specialized technologies that can evolve far more rapidly than traditional hardware programs.
Warfare is becoming increasingly autonomous, data-driven, and dependent on commercial innovation. Space and cyber domains are now as central as land, sea, and air. The ability to iterate quickly – to update software, adapt tactics, and deploy new systems – often matters more than the size of a nation’s arsenal.
Recent industry mapping has shown that Israel’s defense-tech sector has nearly doubled in size since October 7, growing from roughly 160 companies in 2024 to over 330 active start-ups today. And those start-ups have had orders that have reached approximately $330 million in exports – representing double the amount registered in the same period of 2025.
“Defense-tech is part of the State of Israel's unique advantage, built on combat-proven capabilities that Israeli talent has successfully demonstrated on the battlefield time and again,” said Defense Ministry Director-General Maj.-Gen. (res.) Amir Baram.
For a country known as the “Start-Up Nation,” the surge is striking, and for the defense establishment, it is becoming indispensable.
Israel is now the Defense-Tech Nation.