Israel Selects Managers for New State Backed Defense Tech Venture Funds
Israel has selected two investment managers to establish new venture capital funds focused specifically on advanced defense technology.
The selected managers
The Ministry of Defense and the Finance Ministry's Accountant General announced on September 22 that Adir Capital and SLING CAPITAL had won the tender to manage the funds.
Adir Capital is associated with Idan Financial Instruments, while SLING CAPITAL is associated with Giza.
Why defense tech needs its own funds
The initiative is intended to address a financing problem specific to defense technology.
Unlike many software startups, defense companies may require expensive hardware development, manufacturing capacity, extensive testing and longer procurement cycles before reaching significant commercial revenue.
That can make some defense projects less suited to conventional venture capital models.
According to the Ministry of Defense, the new funds are intended to make strategic investments in what it describes as pure defense technology and support technological, industrial and security independence.
The government also identified resilient critical supply chains, economic activity and employment as objectives of the program.
How the funds are structured
The project links private investment managers with state guarantees rather than creating a conventional government owned investment fund.
An earlier version of the initiative sought approval for government guarantees of up to approximately NIS 200 million. The September 2026 announcement, however, focused on selection of the managers rather than announcing that investments had already begun.
That distinction is important. Adir Capital and SLING CAPITAL have been selected, but they must still complete fundraising before the funds become operational. The Ministry of Defense said activity is expected to begin in the coming months.
What comes next
The move comes as Israel's defense technology sector has expanded beyond large established manufacturers into startups working on drones, autonomous systems, artificial intelligence, sensors, electronic warfare and other technologies.
Whether the new structure succeeds will ultimately depend on the amount of private capital raised, the companies selected and the commercial and operational results of those investments.
For now, the concrete development is that Israel has completed the manager selection stage for a new financing mechanism designed specifically for defense technology companies.
