Israel’s Defense Ministry sees startups as vital for war effort

By Investor Empires On Nov 10, 2024

The increasing security tensions in the world have put on the agenda the need for advanced technologies in the security sector. Representatives of the Defense Research and Development Directorate (DDR&D) (MAFAT), venture capital investors and entrepreneurs of the Ministry of Defense participated in a conference dedicated to startups operating in the field of security, which was held at the initiative of the Fusion Fund and the Solidarity Fund. Pearl Cohen Law Firm.

The conference was opened by Colonel Nir Weingold, Head of the Department of Planning, Economics and Information Technology at DDR&D (MAFAT). He presented the necessity of working with emerging companies to develop innovation on a flexible and rapid model. The Ministry of Defense currently works with about 270 startups, either directly or indirectly. But the enemy also knows how to access commercial technological developments and use them in war, and we see this in the activities of Hamas and Hezbollah. This increases direct competition with Israel in the race to develop innovation and spread it on the ground. Therefore, the Department of Defense works using commercial technologies, which can have a dual purpose by also being used in security.

“We held this event since defense recently found its way into the heart of Israeli high-tech,” said conference organizer and Fusion Fund partner Guy Katsovich. “There are more people interested in working in the industry but business network connections in the industry are not enough. The conference will allow networking between people in the Ministry Defense, venture capital investors and entrepreneurs so that they can exchange ideas and create the business connections required to move the industry forward since the beginning of the war, have been interested in working in the defense sector.

circumstance. “The defense sector is clearly in the making, and we are learning as we go,” added Guy Lachman, partner and co-chair of the IL High-Tech Practice Group at law firm Pearl Cohen. “Defense projects are plagued by many legal dilemmas already when they are established, and there is “The issue of where IP is located and protected, and the optimal location for incorporation that will allow working with a range of governments and complying with the overall IP regulation they will have to successfully meet.”

Speaking to a panel of venture capital investors held at the event, Alon Kantor, partner at 10D, said: “Since the clients for defense projects are governments and security forces, the sales process is slower and it is difficult to reach out to clients and receive feedback from them about when you are An entrepreneur in this sector, we opened a company in Israel with a subsidiary in the US, which made it very difficult for us to sell to US security institutions and raise money from investors in the US. It would have been better to set up the company in the US.”

Lisa Cohen, partner at Intel Capital, added: “As investors, we need to see that there is a dual use for the technologies that the startup is developing, and that the company has a market with security needs as well as a market for commercial needs. Additionally, there needs to be someone with experience.” The founding team of the project is familiar with the US security forces, knows the paths and can open doors in the market, which is difficult to penetrate.”

TLV Partners partner Yonatan Mandelbaum thinks differently. He said: “We do not believe in the dual use of technology and prefer that the company focus in the first five years on the security sector. It is true that it is difficult to find customers compared to the commercial market, but from the moment you have them, you have sold them with long-term contracts that cannot be canceled easily.” Bringing generals into the founding team may kill the startup, and it’s best to work with them as outside advisors.

“Entrepreneurs who founded companies in commercial fields discover that they have a security market only after establishing contact with entities like MAFAT,” said Miriam Shtelman-Lafsovsky, partner at Tal Ventures. “On the contrary, cybersecurity was also a military necessity and posed a major challenge.” . A major shift to the commercial market.”

Published by Globes, Israel Business News – en.globes.co.il – on November 10, 2024.