Protection Ministry orders increase Israeli startups
2025 was extremely profitable for protection startups in Israel, which received orders price NIS 1.08 billion, about 25% of which got here from overseas clients. As well as 31 startups acquired worldwide publicity at main exhibitions all over the world, in accordance with the year-end report of the Ministry of Protection Directorate of Protection R&D (DDR&D) (MAFAT).
The amount of orders final 12 months was distinctive, contemplating that since its it was based MAFAT has entered into general offers with startups price NIS 4.6 billion. Nonetheless, this isn’t an unprecedented annual quantity, as in 2024 the worth of orders was even larger, at NIS 1.22 billion. In the present day, MAFAT works straight with 221 corporations, out of some 302 corporations within the trade.
50% of the offers had been with early stage corporations
The kind of orders highlights the position 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 levels – pre-seed and seed, – levels by which the corporate continues to be creating 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 levels, whereas mature corporations (Sequence C and past) signify solely 0.6% of offers over time, and 0 final 12 months.
Complete funding raised by corporations that acquired 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 overall 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 in recent times 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 fee days in some circumstances. Throughout 2025, 77 new suppliers registered for the observe, and the variety of corporations registered is presently 295.
Drones, AI and responding to the challenges of army drugs
When it comes to 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 acquired solely about 11% of orders that 12 months. In contrast with the technological range, the geographical distribution is extra restricted: virtually two-thirds (63.7%) of the businesses are within the middle of Israel.
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Within the first half of 2025, MAFAT revealed 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 by which 72 corporations participated, and 24 of them acquired follow-up orders from MAFAT price 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 Know-how and Logistics Division and led by MAFAT, additionally aroused nice curiosity, and focuses on challenges within the fields of logistics and army drugs, meals, and sustainability. Ten corporations are collaborating within the first cycle, and two of them have already acquired follow-up orders from MAFAT price 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 techniques, suicide prevention simulators, preliminary psychological triage, interpretation of medical assessments akin to ECG and POCUS, options for protecting supplies, automation and robotics.
Energetic within the worldwide area
One other notable leap was recorded in contracts with overseas clients. 17 Israeli startups which are in contract with MAFAT acquired 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 similar time, MAFAT labored to strengthen the native protection group by means of three webinars and 6 meetups, which had been attended by 2,500 contributors. Among the many intriguing contributors 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 12 months, with Protection Trade 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 Techniques Evaluation Division Col. Yishai Cohen tells “Globes” that one of many long-term options that will present a response to the lower within the depth of preventing and the upcoming protection funds 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 funds that generated more cash (for the startups), and because it appears in 2026 there can be a fair smaller protection funds 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 typically and G2G (government-to-government) gross sales particularly 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 Normal of the Ministry of Protection, Maj. Gen. (Res.) Amir Baram, so long as we encourage the export of Israeli merchandise, they are going to contribute to international safety, usher in income and be helpful when there are tougher years when it comes to budgets within the nation.”
Printed by Globes, Israel enterprise information – en.globes.co.il – on January 21, 2026.
© Copyright of Globes Writer Itonut (1983) Ltd., 2026.
