Israeli defense-tech startups, which develop attack drones, drone defenses and various munitions, have become a point of pride for the local industry, but most of the capital has so far come from foreign investors such as Lux Capital, Sequoia and Peter Thiel’s Founders Fund. According to IVC, only 0.5% of all money invested in Israeli startups has gone to Israeli defense-tech companies. Most Israeli investors have stayed on the sidelines, aside from newer, smaller firms including Protego, Kinetica, Aurelius and 10D.
A new Israeli venture fund focused on the sector, Stratos Ventures, was unveiled on Monday and says it has already made five quiet investments in young companies. The fund has raised $50 million toward an $80 million target, anchored by a British institutional investor and joined by several former senior security officials from the United States, South America and India.
Stratos says it wants to give Israeli founders access to the U.S. Department of Defense, DARPA, U.S. Central Command, private American defense funds and the Port of Miami. It is also working through a partnership with The Lab Miami accelerator, which was co-founded by Israeli entrepreneur Eyal Stern. Among its advisers and partners are a former CIA chief whose name was not disclosed, retired Lt. Gen. Michael Barbero, a four-star U.S. Army general who also commanded the 101st Airborne Division, and Theo Williams, formerly head of strategic investments at Salesforce.
The fund was founded by three Israelis active in defense investing through family offices and funds, Rotem Yehuda Kakun, Aviad Greenfeld and Daniel Pozyalov. It will back pre-seed through post-seed companies founded by Israelis or firms with significant ties to Israel, and plans to invest in 15 to 20 startups at an average of $2 million to $4 million each. Two of its five investments have already surfaced in startup databases: Tenna Systems, which says it disrupts electronic warfare using RF-based technology, and G2, founded by Ryan Gity, whose hardware is designed to push more AI processing onto weapons systems, armored vehicles and flying munitions so they can communicate and act in real time.
