2025 was extremely profitable for protection startups in Israel, which received orders value NIS 1.08 billion, about 25% of which got here from international clients. As well as 31 startups obtained worldwide publicity at main exhibitions around the globe, in keeping with the year-end report of the Ministry of Protection Directorate of Protection R&D (DDR&D) (MAFAT).
The quantity of orders final yr was distinctive, contemplating that since its it was based MAFAT has entered into total offers with startups value NIS 4.6 billion. Nonetheless, this isn’t an unprecedented annual quantity, as in 2024 the worth of orders was even greater, at NIS 1.22 billion. At the moment, MAFAT works immediately with 221 corporations, out of some 302 corporations within the business.
50% of the offers had been with early stage corporations
The kind of orders highlights the function of small corporations and startups as an engine of innovation. About 35% of the orders had been directed in the direction of R&D, and about 41% in the direction of gear. The offers had been made with 152 corporations, virtually half of that are in very early phases – pre-seed and seed, – phases through which the corporate continues to be growing the preliminary expertise and generally has not but begun gross sales. That is a part of a historic pattern that MAFAT has adhered to over time. Greater than half of MAFAT’s contracts have been with corporations in early phases, whereas mature corporations (Sequence C and past) symbolize solely 0.6% of offers over time, and nil final yr.
Complete funding raised by corporations that obtained a direct order from MAFAT in 2025 was $1.2 billion. When inspecting the ratio between the amount of orders from MAFAT and whole fund elevating, it turns into clear that MAFAT’s affect is especially excessive initially. In pre-seed and seed corporations, orders from MAFAT represent 34% of the whole funding quantity, in contrast with solely 17% in Sequence A and 15% in Sequence B corporations and past.
One of many key actions taken by the IDF lately is the institution of the “inexperienced observe”, which reduces bureaucratic obstacles and permits for simpler phrases for startups, with an emphasis on prioritizing and expediting the provider registration course of, acceptance of processes, exemption from ensures and even shortening cost days in some instances. Throughout 2025, 77 new suppliers registered for the observe, and the variety of corporations registered is at the moment 295.
Drones, AI and responding to the challenges of navy medication
By way of exercise to which many of the cash flowed, autonomous platforms (drones, for instance) are high with 32.5% of orders, adopted by AI and digital (19.9%), cyber (17.7%) and sensors and detectors (9.3%). In 2024, autonomous platforms had been in first place with 26.4%, adopted by cyber (24.8%) and sensors and detectors (19.5%). The AI and digital sector obtained solely about 11% of orders that yr. In contrast with the technological variety, the geographical distribution is extra restricted: virtually two-thirds (63.7%) of the businesses are within the heart of Israel.
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Within the first half of 2025, MAFAT printed 19 requires proposals – open requires corporations to suggest technological options. These yielded 661 proposals, of which 220 had been submitted to “Innopens,” MAFAT’s startup accelerator. The accelerator accomplished 5 cycles through which 72 corporations participated, and 24 of them obtained follow-up orders from MAFAT value a cumulative whole of greater than NIS 55 million.
The requires proposals for the “Innotel” accelerator, which was launched on the finish of 2024 in cooperation with the IDF Expertise and Logistics Division and led by MAFAT, additionally aroused nice curiosity, and focuses on challenges within the fields of logistics and navy medication, meals, and sustainability. Ten corporations are collaborating within the first cycle, and two of them have already obtained follow-up orders from MAFAT value a complete of NIS 4.5 million.
As a part of Innotel’s requires proposals, dozens of proposals had been submitted in areas akin to sensors for the injured, upkeep administration methods, suicide prevention simulators, preliminary psychological triage, interpretation of medical assessments akin to ECG and POCUS, options for protecting supplies, automation and robotics.
Lively within the worldwide enviornment
One other notable soar was recorded in contracts with international clients. 17 Israeli startups which can be in contract with MAFAT obtained orders from overseas in 2025 totaling NIS 297 million ($89.8 million), in contrast with NIS 457 million cumulatively over time as much as 2024.
On the identical time, MAFAT labored to strengthen the native protection group by way of three webinars and 6 meetups, which had been attended by 2,500 individuals. Among the many intriguing individuals who attended the occasions had been Palantir CTO Shyam Sankar and Sequoia Capital associate Shaun Maguire.
Early stage corporations additionally attracted curiosity in conferences and exhibitions held final yr, with Protection Business and Commerce Group (DIST) offering a platform for 31 corporations at exhibitions, together with DSEI Japan, the Bangalore Tech Summit in India, and the Protection Week convention in Tel Aviv.
DIST head of the Planning, Economics, and Programs Evaluation Division Col. Yishai Cohen tells “Globes” that one of many long-term options which will present a response to the lower within the depth of preventing and the upcoming protection finances is startup fund elevating, which has crossed the $1 billion mark because the starting of 2025, as of the start of December.
“In 2024, it was the battle finances that generated extra money (for the startups), and because it appears in 2026 there shall be a fair smaller protection finances than in 2025. Within the shadow of the downward pattern in our budgets, MAFAT chief Dr. Danny Gold, is main exercise that, regardless of the decline in protection budgets, will make sure the preservation and strengthening of startups.”
The difficulty of exports usually and G2G (government-to-government) gross sales specifically is a matter that the Protection Ministry goals to proceed selling in 2026. “We’re pushing startups into the G2G discourse, as a result of international demand is at a really important stage. Germany, for instance, is trying for lots of protection tech,” explains Col. Cohen. “In accordance with the coverage of the Director Basic of the Ministry of Protection, Maj. Gen. (Res.) Amir Baram, so long as we encourage the export of Israeli merchandise, they may contribute to international safety, herald income and be helpful when there are harder years by way of budgets within the nation.”
Revealed by Globes, Israel enterprise information – en.globes.co.il – on January 21, 2026.
© Copyright of Globes Writer Itonut (1983) Ltd., 2026.
