Israeli venture capital firm Fusion has introduced a dedicated investment track for defense technology start-ups. The new program provides initial funding of up to $2 million to companies developing solutions for military operations, national security, and critical infrastructure.
The initiative was launched in partnership with Stratos Ventures. Selected participants will receive investments between $500,000 and $2 million. In addition to capital, these companies gain access to extensive networks within the defense industries of Israel, the United States, and Europe.
This move occurs as global interest in Israel's defense technology sector continues to grow. Recent operational experiences and rising demand for technologies such as autonomous systems, electronic warfare, and infrastructure protection have attracted significant attention from international investors and defense organizations.
Despite this growth, Fusion notes that investment focus remains narrow. Guy Katsovich, co-founder and managing partner at Fusion, stated that much of the current capital flows into popular categories like drones. He argued that other strategically important areas are often overlooked due to a gap between founder potential and early-stage funding access.
Katsovich emphasized that Israel holds a distinct advantage in this field, citing the practical experience and expertise accumulated within its defense establishment. The fund aims to support founders working on complex and unconventional problems by providing both financial resources and connections to potential customers and partners.
Investments will be structured through Simple Agreement for Future Equity, or SAFE, agreements. This financing method is common for early-stage ventures before a formal valuation is determined. Participating companies will also join Fusion's accelerator program, which offers guidance on business strategy, model development, fundraising, and commercial preparation.
The program facilitates introductions to senior military officials, defense executives, and government bodies. International connections include the US Department of Defense, NATO's DIANA innovation program, and the US Army's FUZE program. Within Israel, start-ups will be linked with major contractors such as Rafael, Elbit Systems, and Israel Aerospace Industries.
The investment scope covers a wide array of sectors. These include defense systems, homeland security, advanced materials, supply chains, critical minerals, and energy security. Additional areas of interest encompass maritime and space technologies, geospatial intelligence, data centers, biosecurity, and climate resilience.
Fusion's existing portfolio already includes companies in these fields. Notable investments include Skapion, which develops mobile systems to neutralize drone swarms, and Tenna, a provider of software for spectrum intelligence and electronic warfare. The fund also supports Hoopo, which tracks non-powered asset fleets, and Newlight, which builds energy infrastructure for the maritime industry.
The firm manages approximately $50 million and has invested in around 160 start-ups. According to the fund, the combined valuation of these companies has surpassed $3 billion. Katsovich stated that the goal is to empower founders tackling difficult problems with the resources needed to lead the global defense industry.
