Israel Selects Two Funds to Invest in Defense Startups with State Guarantees

Israel's Ministries of Finance and Defense have chosen Adir Capital, part of Idan Financial Instruments, and Selling Capital, part of Giza, as the winners of a tender to establish venture capital funds focused on defense technology. These funds will operate with state guarantees and are set to begin raising investors in the coming months. The tender process was managed by the Accountant General's office at the Finance Ministry and the Directorate of Research and Development of Weapons and Technological Infrastructure (MAPAT) at the Defense Ministry. The funds are intended to invest in startups developing advanced defense technologies, particularly those requiring extensive R&D, manufacturing capabilities, and significant upfront investment before generating revenue. A key objective is to facilitate capital raising for such companies from private investors, who often face challenges due to long development cycles, high production costs, and regulatory hurdles.

The initiative also aims to bolster Israel's technological and manufacturing independence and reduce reliance on foreign suppliers. The Finance and Defense ministries highlighted that the necessity for domestic production and stable supply chains has become more apparent during the recent war and amidst global geopolitical shifts. The state guarantees are designed to mitigate some of the risk for private investors, encouraging them to fund the defense tech sector. The selection of the winning funds marks a significant step, but Adir Capital and Selling Capital must first secure their investor commitments before commencing actual investments in companies.

Finance Ministry Director General Israel Malachi stated that this initiative exemplifies how the state can leverage smart financial tools to channel private capital towards national goals, enhancing investments in advanced technologies and supporting Israeli entrepreneurs. Defense Ministry Director General Maj. Gen. (res.) Amir Yifrah emphasized the need to increase R&D investment to maintain Israel's strategic qualitative advantage and develop future technological surprises. Accountant General Michal Abadi-Boiangiu noted the collaboration between her office and the defense establishment, seeing the vision of strengthening technological independence and supporting local innovation become a reality. Head of MAPAT, Brig. Gen. (res.) Dr. Dani Gold, added that connecting private capital with innovation and defense needs will accelerate the development of groundbreaking technologies and bolster Israel's manufacturing self-sufficiency.