Startup Nation Central Leadership Circle Unscripted: Israeli Defense Tech Innovation

A Conversation with Ilana Sherrington Hoffman and Lital Leshem

The Startup Nation Central Leadership Circle is a global forum where investors, business leaders, and policymakers connect to explore and support Israel’s high-tech ecosystem through investment and collaboration. This initiative provides a platform for high level discussions on economic resilience, technological breakthroughs, and Israel’s role in shaping global innovation. 

Leadership Circle Unscripted is an exclusive series for members that offers behind the scenes insights into the trends, challenges, and opportunities defining Israeli tech today. The most recent session focused on one of the most significant transformations in Israel’s innovation landscape: the rise of defense tech startups in response to global security shifts and the events of October 7. 

The conversation featured Ilana Sherrington Hoffman, Director of Global Partnerships at Startup Nation Central, and Lital Leshem, cofounder and managing partner at Protego Ventures, Israel’s first defense focused, women led venture capital firm.  

This was more than an interview. It was a strategic discussion between two leaders shaping the future of defense tech in Israel, one from the world of venture capital and the other that connects Israeli startups to global investors, multinationals, and government partners to secure a stronger economic future. 

The New Defense Tech Economy 

For decades, Israel’s defense industry was dominated by three major companies, Rafael, IAI, and Elbit. These large contractors worked closely with the government, securing long-term procurement deals and developing proprietary technologies with little room for smaller players. Startups found it difficult to enter the space due to lengthy regulatory approvals, high barriers to entry, and a lack of venture funding. 

That reality has changed. A new era has begun, defined by over 300 small, agile defense tech startups developing battlefield tested technologies in real time. Unlike traditional defense contractors, these startups are moving faster, focusing on software driven solutions, and attracting venture investment in ways the industry has not seen before. 

Ilana Sherrington Hoffman described the shift as a structural transformation that is being tracked in real time through Startup Nation Central’s Finder business platform, the most comprehensive database of Israeli startups. She explained: 

“At Startup Nation Central, we don’t just track trends—we act on them. Our Finder platform gives us unparalleled insight into the surge of new startups, investment patterns, and global demand for Israeli defense tech. This is not just an uptick. It is a fundamental shift in the sector. The number of defense tech startups has doubled in 2024 compared to 2023. That is an extraordinary indicator of the momentum and transformation taking place.“  
— Ilana Sherrington Hoffman 

October 7 and the Acceleration of Defense Tech 

The attacks on October 7 changed everything. The Israeli military and intelligence community faced new threats that highlighted urgent gaps in technology, and many reservists returning from active duty found themselves confronted with an opportunity to address those challenges. Entrepreneurs emerging from elite military units and operational command centers turned firsthand battlefield experience into immediate innovation. 

Lital Leshem recalled how that moment became a catalyst for a new generation of defense entrepreneurs: 

“Most of the founders I meet were on the battlefield just weeks or months ago. They saw exactly what was missing, and they came out determined to solve those problems. It is not just about business for them. This is personal. They understand the stakes, and that is what is driving this new wave of defense tech innovation. The speed at which they are moving is unprecedented, and for the first time, investors are taking serious interest in backing defense startups in Israel.“  
— Lital Leshem 

Four Areas Defining the Future of Defense Tech 

1. Counter Drone Technologies 

Drones have become one of the most pressing threats on the modern battlefield. With terror groups purchasing commercial drones online, modifying them with explosives, and using them for devastating attacks, traditional defense strategies are struggling to keep up. 

“Terror groups are buying drones on AliExpress for $90, strapping explosives to them, and creating great damage for us. And how are we countering them? With an F-35 jet. That’s not sustainable. We need better solutions, and Israeli startups are already stepping up to meet this challenge.“  
— Lital Leshem 

Israeli startups specializing in AI driven detection, electronic warfare countermeasures, and autonomous drone interception are racing to develop scalable, cost-effective alternatives to counter this growing threat. 

2. Robotics and Autonomous Systems 

The battlefield is becoming increasingly automated, and autonomous technologies are playing a growing role in modern warfare. The Israeli Defense Forces have rapidly integrated drones and robotics into combat operations, a trend that is expected to define the next generation of military strategy. 

“There’s no unit in the IDF today that doesn’t have at least one drone accompanying it. Every IDF unit today operates with at least one drone before entering an urban combat zone. The future of warfare is unmanned, and robots, drones, and autonomous vehicles will take over many of the most dangerous tasks.“  
— Lital Leshem 

One of the companies at the forefront of this transformation is Xtend, a Protego Ventures portfolio company that has developed a real-time operating system for military robotics. 

3. Underground Warfare Solutions 

With tunnel warfare emerging as a major strategic threat, Israeli startups are pioneering AI driven subterranean detection and mapping technologies. 

“We’re seeing huge advancements in underground detection technology, with AI powered solutions that can map and analyze subterranean threats in real time. These technologies are becoming a critical element in how we respond to underground threats.“  
— Lital Leshem 

4. Dual Use Technologies 

One of the most significant trends in defense tech today is the crossover between civilian and military applications. Many of the most impactful defense innovations were originally developed for commercial markets before being repurposed for national security. 

“We’re seeing commercial startups pivot into defense at an unprecedented rate. Technologies from gaming, infrastructure mapping, and AI analytics are now critical for military applications.“ — Ilana Sherrington Hoffman 

Examples include: 

• Xtend, originally developed for gaming, now used for drone battlefield operations 

• Exodigo, a subsurface mapping startup, now used for detecting underground threats 

Startup Nation Central: Bridging Innovation and Investment 

While global investor interest in Israeli defense tech is growing, many startups still struggle to scale internationally. Selling into the United States defense market requires an understanding of procurement systems, legal frameworks, and government processes that many founders are not equipped to navigate alone. 

“A lot of these startups have breakthrough technology, but they do not always have the experience or network to break into foreign markets. They speak English, but they do not always ‘speak American.’ Startup Nation Central is working to close that gap, helping these companies position themselves for global expansion and secure partnerships with international investors and defense agencies.“  
— Ilana Sherrington Hoffman 

A Defining Moment for Israel’s Defense Tech Sector 

Defense tech is no longer a niche industry in Israel. It has become a central pillar of the economy, attracting unprecedented investment and positioning Israel as a global leader in military innovation. 

“We are not just seeing an increase in defense startups. We are seeing a fundamental shift in how war is fought and how defense innovation is created. This is not a temporary boom. This is the future.“  
— Lital Leshem 

As Israel’s defense tech sector continues its rapid expansion, Startup Nation Central is ensuring that Israeli innovation reaches the world. The Startup Nation Central Leadership Circle is a global community of business leaders committed to supporting Israeli innovation through investment and collaboration. The Leadership Circle Unscripted series provides frictionless access to the Israeli tech ecosystem’s biggest players and unique insights from those in the know.

Learn more here