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Introduction
In a time when global sentiment toward Israel is increasingly polarized, something unexpected is happening beneath the headlines: global demand for Israeli defense technology is soaring. While protests and criticisms dominate international media, nations and investors alike are lining up to partner with Israeli innovators. One such enthusiastic supporter is Josh Wolfe, co-founder of Lux Capital—a U.S.-based venture capital firm that recently began pouring millions into Israeli defense startups. In an exclusive interview with Calcalist, Wolfe outlines how Israel’s wartime innovations are not just surviving global scrutiny but thriving in international demand.
This article explores how Lux Capital is backing Israeli defense startups, why global investors are racing to get in, and how Israel is emerging as a tech leader in modern warfare despite global controversies.
Israeli Defense Tech: From Local Resilience to Global Demand
Josh Wolfe, co-founder of Lux Capital, believes Israel has become the envy of the global defense community—particularly during its existential wartime moments. Speaking to Calcalist, Wolfe noted how recent events like the April Iranian missile attack demonstrated Israel’s advanced defensive capabilities. From the Iron Dome to the Arrow system, Israeli tech proved not only effective but desirable worldwide. “No one said, ‘They were lucky.’ They said, ‘I want that too,’” Wolfe stated.
Lux Capital manages \$5 billion and specializes in deep technologies. The firm made its first investment in Israeli defense tech post-October 7 and hasn’t looked back. Wolfe explains that the technologies being developed in Israel have global relevance, especially in the context of tensions involving Russia-Ukraine, China-Taiwan, and various African nations.
Wolfe had planned to visit Israel but postponed due to security concerns. A committed Zionist with deep ties to Israel, Wolfe still plans to visit family this summer and is considering opening a permanent Lux office in the country. His decision to invest wasn’t despite the war—it was because of it.
Lux joined Sequoia Capital in investing in Kela, a defense startup founded by IDF veterans. Since then, they’ve poured tens of millions into Kela and other stealth-mode ventures, including Majestic Labs AI, founded by Dr. Ofer Shacham, formerly of Meta, Google, and Nvidia. Wolfe emphasizes the need for secrecy in early-stage defense startups: avoiding competition and the risks of overpromising.
Investor interest in Israeli defense tech has surged. Wolfe reveals that Lux raised a \$200 million fund solely focused on defense, and some limited partners (LPs) are even asking to invest directly. For many, this isn’t just business—it’s mission-driven, like investing in cancer research.
Is this a wartime bubble? Wolfe doesn’t think so. Defense is no longer seen as a niche play. It’s critical infrastructure. Lux has already invested over \$1 billion in defense ventures globally. Wolfe cites Anduril, a once-dismissed defense startup now valued at \$28 billion, as a case study for what Israeli firms like Kela could achieve.
With advisors like former U.S. diplomat Brett McGurk on board, Lux is confident in its Israeli portfolio. Wolfe predicts Kela will be a billion-dollar company, changing not just the battlefield, but also how military procurement is approached. Israeli startups, he argues, are poised to reshape global defense, and demand is only accelerating—even if the politics remain divisive.
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A Strategic Inflection Point for Israeli Tech
From an analytical standpoint,
- Geopolitical Tailwinds: Global instability has changed how nations view national security. Investment is shifting from consumer apps to hard tech with tangible battlefield value. Israel, with its rich history of military R\&D, is uniquely positioned to capitalize.
Credibility Through Combat: Technologies tested in active combat zones like Israel gain real-world validation that labs simply can’t replicate. This battle-proven track record gives Israeli startups instant credibility.
Global Capital Flow: While traditional VCs once saw defense tech as too slow or niche, the Ukraine war and threats in the Indo-Pacific have changed the game. Wolfe points out that funds are no longer cautious—they’re competing.
Dual-Use Technologies: Many Israeli defense systems incorporate AI, cybersecurity, and semiconductors, enabling cross-sector applications. This adds appeal for investors looking to diversify across verticals without changing their core tech thesis.
Talent Density: The IDF’s elite tech units (e.g., Unit 8200) produce startup founders with unparalleled domain knowledge. Wolfe compares this talent pipeline to Silicon Valley’s early PayPal Mafia—only sharper and more battle-aware.
De-risking Perception: Wolfe challenges the old notion that defense tech is too risky. Instead, it’s becoming less risky in a world where cybersecurity breaches and kinetic threats are top concerns.
Narrative Reversal: Despite growing anti-Israel sentiment in some international spheres, Wolfe suggests that the performance of Israeli systems forces a reassessment. Governments that criticize Israel publicly are still making inquiries behind closed doors.
Market Entry Strategy: Wolfe advises startups to first partner with the IDF or DDR\&D to ensure local efficacy. Only then should they expand globally—a clear go-to-market model that leverages domestic success as a launchpad.
Moral Framing of Capital: Many investors are treating defense tech investments like public health or climate change—opportunities that blend profit with purpose. This moral narrative helps attract capital from unexpected sources.
Legacy Disruption: Israeli startups are challenging established defense contractors, similar to how fintech disrupted traditional banks. Wolfe believes this underdog mentality is why companies like Anduril succeeded—and why Kela will follow.
The data speaks for itself. When billions are being committed in wartime, and new funds are raised in record time, it indicates not just confidence—but urgency.
🧠 Fact Checker Results
Israel’s Iron Dome and Arrow systems successfully intercepted a major missile attack in April 2024. ✅
Lux Capital did not invest in Israeli companies until after October 7, 2023. ✅
Kela, the Israeli startup mentioned, has raised over \$100 million and is backed by both Sequoia and Lux. ✅
🔮 Prediction
Given the convergence of global conflict, evolving tech landscapes, and a new era of venture capital focus, Israeli defense startups will see exponential growth in both valuation and geopolitical importance. Companies like Kela could indeed become unicorns, setting a precedent for future military-tech entrepreneurship. Within the next 3–5 years, expect more U.S. and EU defense agencies to partner with Israeli firms, turning wartime necessity into long-term innovation strategy.
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Reported By: calcalistechcom_64f96796337f00f9b28f99c5
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