Israeli venture capital fund Fusion has launched a new investment track for defense technology start-ups, offering up to $2 million in initial funding as it looks to back companies developing technologies for military, national security, and critical infrastructure applications.
Launched in partnership with Stratos Ventures, the program will provide selected start-ups with investments ranging from $500,000 to $2 million, along with access to defense industry networks and military and government organizations in Israel, the United States, and Europe.
The initiative comes as Israel’s defense-tech sector continues to attract growing interest from global investors and international defense industries following the last few years of operational experience and increased demand for technologies ranging from autonomous systems to electronic warfare and critical infrastructure protection.
But Fusion says much of the investment attention remains concentrated in a relatively narrow group of technologies, leaving other strategically important areas without sufficient early-stage funding.
“We believe Israel has a significant advantage in developing defense technologies, thanks to the practical experience and unique expertise built up over the years within its defense establishment and defense industries,” said Guy Katsovich, co-founder and managing partner at Fusion.
“However, we see a significant gap between the potential of founders in this sector and their access to early-stage capital. Much of investors’ attention today is directed toward popular categories such as drones and autonomous systems, while other areas of equally significant strategic importance are being overlooked.”
The fund aims to address that gap by backing founders working on what it describes as complex and unconventional defense problems, providing them with capital and connections to potential customers, partners, and defense organizations.
Investments will be made through SAFE (Simple Agreement for Future Equity) agreements, a financing mechanism commonly used by early-stage companies before a formal valuation is established. Beyond funding, selected companies will join Fusion’s accelerator program, receiving support in business strategy, business model development, fundraising, and preparations for commercial operations.
The program will also provide access to senior military officials, defense industry executives, and government organizations, including the US Department of Defense, NATO’s DIANA innovation program, and the US Army’s FUZE program.
In Israel, Fusion plans to connect start-ups with major defense contractors Rafael, Elbit Systems, and Israel Aerospace Industries, as well as manufacturers, industrial partners, and senior officials within the defense establishment.
The investment track will cover a broad range of sectors: defense systems, national security, critical infrastructure, homeland security, industrial technologies, advanced materials, supply chains, critical minerals, energy security, maritime and space technologies, geospatial intelligence, data centers, and computing infrastructure.
Other areas of interest include biosecurity and climate resilience, reflecting the fund’s broader focus on technologies with potential military and strategic applications.
Fusion has already invested in several companies developing technologies in these fields. Its portfolio includes Skapion, which is developing a mobile system to detect, intercept, and neutralize large drone swarms; Tenna, which develops software for spectrum intelligence and electronic warfare; Hoopo, which provides tracking and intelligence solutions for fleets of non-powered assets; and Newlight, which is developing energy infrastructure for the maritime industry.
The fund has also invested in stealth-stage companies working on compact particle accelerators for directed-energy defense applications, autonomous aerial systems, and robotic tactile sensing arrays.
Fusion operates a pre-seed investment fund alongside an accelerator program supporting companies during their earliest stages. It manages approximately $50 million and has invested in around 160 start-ups, whose combined valuation has surpassed $3 billion, according to the fund.
“We want to give founders tackling complex and unconventional problems access to the funding, guidance, and connections they need to build companies that will lead the global defense industry,” Katsovich said.