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Reservists leverage tech skills for defence innovation

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Startups draw investors from Israel and abroad

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Israeli defence exports to Europe rise despite boycott

calls

By Emily Rose

JERUSALEM, July 8 (Reuters) - Israeli army reservist

Zach Bergerson felt he had to take action when he saw fellow

soldiers having to rely on their eyes and ears to detect swarms

of enemy drones overhead.

So the high-tech professional, 36, developed a wearable

device that uses mobile phone technology to warn troops of

aerial threats. Like other reservists, Bergerson has leveraged

his civilian expertise and military experience to bolster

Israel's defence industry.

Known as SkyHoop, his startup has since emerged from stealth

mode - a period when startups typically work in secrecy - to be

piloted in Ukraine with discussions under way for a trial by the

U.S. Defense Department.

While U.S. President Donald Trump brokers a Gaza ceasefire,

Israeli startups like Bergerson's are drawing investment from

U.S. and Israeli venture capital firms and looking to build on a

growing European market for Israeli defence exports.

More than a third of all defence tech startups registered

with the country's Startup Nation Central, an organization that

tracks Israeli innovation, were created since a deadly Hamas

attack on Israel on October 7, 2023, launched the war in Gaza.

In June, while Israel attacked Iranian nuclear and ballistic

missile targets, their 12-day air war highlighted the efficacy

of Israel's aerial defences. Israel successfully intercepted 86%

of Iran's ballistic missile launches, the Defence Ministry said.

The changing nature of war has led to shifts in defence

procurement worldwide. Western armies demand new battle-tested

technology, refined by soldiers in combat. Some 20% of Israeli

reservists work in the robust high-tech sector.

Israeli defence startups have drawn investment from major

American venture capital firms that previously avoided the

sector as it was considered riskier and mired in regulation.

Israeli VC firms have emerged as well to invest in defence.

Lital Leshem, an Israeli reservist, in December co-founded

Protego Ventures, a fund that has studied some 160 defence

companies and raised around $100 million. She expects the fund

will invest in around four companies by year's end.

"Reservists are coming out of the battlefield and are

actually putting together new companies to solve real problems

that they have experienced in real time on the battlefield,"

Leshem told Reuters.

These companies will face major challenges scaling up to the

global market and overcoming regulatory hurdles, Leshem said,

but she predicts that, like Israel's cyber industry, it is a

field in which Israeli entrepreneurs can thrive.

These startups formerly viewed the U.S. as the "holy grail"

for their target market, Leshem said, but that is also

changing.

EYES ON EUROPE

Israeli startups are hoping to benefit from Trump's demand

that European countries take over from the U.S. more of the

burden of defending their continent.

Under a new NATO defence spending plan, countries will spend

5% of GDP - up from 2% - on defence. The figure includes 3.5% of

GDP on "core defence" such as weapons and troops and 1.5% on

security-related investments.

Such an increase - to be phased in over 10 years - will mean

hundreds of billions of dollars more spending on defence.

Israel's defence exports hit a record $14.8 billion in 2024,

according to Defence Ministry figures released last month, while

exports to Europe comprised more than 50% of these sales, up

from 35% in 2023.

Despite calls from some countries to boycott Israeli

weapons, "when one side is purchasing, in the end, they want to

buy the best product possible," said Reserve Brigadier General

Yair Kulas, head of the Defence Ministry International Defence

Cooperation Directorate.

Largely as a result of the Russia-Ukraine war, Kulas said,

European states are upgrading their militaries, sending older

equipment to Ukraine and replacing it with new products, many of

them from Israel. Kulas said the story of Israeli weapons

exports is also part of a larger global trend.

The political backlash is worrisome, Kulas said, because on

the one hand Israel's innovation is groundbreaking and

world-class but there has been a "delegitimization of Israel".

More than 57,000 Palestinians have been killed, most of them

civilians, local health officials have said, in the 21 months

since Israel launched its assault on Gaza, displacing the

population and leaving the territory in ruins.

"I don't know how it will impact the results in 2025," Kulas

told Reuters. He said it is "certainly a huge challenge."

Avi Hasson from Startup Nation Central said the surge of new

defence startups created by reservists is reminiscent of a

technological revolution 20 years ago that would later evolve

into smartphones.

Startups may prompt larger Israeli defence companies such as

Elbit, Rafael and Israel Aerospace Industries to either

try to acquire more Israeli startups and help bring them up to

scale or develop their own technology at a faster pace.

"We are now in a different world," Hasson told Reuters.