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Defense Hardware and AI Venture Bets Drive Israeli Startup Capital

From live-fire missile tests in Morocco to multi-hundred-million-dollar venture funds, Israeli founders are attracting heavy backing across hardtech, cyber, and biotech.

Signalpoint TeamBrief

Startup

Institutional capital is backing company-creation models — showing top-tier Israeli cyber funds retain LP demand despite a broader tech slowdown.

BackgroundTeam8 builds and invests in startups alongside global enterprise partners like Walmart, Cisco, and SoftBank. Its previous fund logged an early exit when Palo Alto Networks acquired portfolio company Koi Security for $400 million.

Points
  1. The allocation includes $265 million for Seed and Series A investments alongside $100 million in dedicated follow-on capital for scaling portfolio companies.
  2. Major corporate LPs include Moody's, AT&T, and Temasek, demonstrating sustained institutional demand for Israeli cyber and enterprise AI innovation.
  3. Team8's company-building venture model continues to yield enterprise acquisitions despite a broader global slowdown in venture capital dealmaking.
SourcesGlobes: Team8 raises $365m (opens in new tab)The Times of Israel: Backed by Walmart and Cisco, Israel's Team8 raises $365m to help build AI startups (opens in new tab)

Startup

Defense startups are moving from software to hardware — using Abraham Accords military infrastructure to test mass-producible long-range strike weapons.

BackgroundFounded in 2024 by American-Israeli entrepreneur Michael Kaufman, Covenant develops low-cost, mass-producible long-range precision strike missiles. The company maintains its primary engineering team in Tel Aviv while expanding regional testing facilities.

Points
  1. Covenant has raised hundreds of millions from major venture firms including Founders Fund and Andreessen Horowitz to develop mass-producible strike munitions.
  2. The Morocco launch facility operates alongside U.S. Africa Command and Moroccan Royal Armed Forces, solidifying regional defense cooperation under Abraham Accords infrastructure.
  3. The live-fire test validates cheap cruise missile manufacturing as venture capital surges into sovereign defense technology across the Middle East.
SourcesThe Jerusalem Post: Israeli-American defense startup launches new Anthem cruise missile in Morocco military test (opens in new tab)

Startup

Digital therapeutics are morphing into hybrid drugs — combining adaptive software with molecular chemistry to unlock higher clinical trial success rates.

BackgroundRemepy develops hybrid drugs that pair prescription molecular therapies with adaptive, AI-driven software applications to boost clinical efficacy. The company was co-founded by Kaltura co-founder Dr. Michal Tsur.

Points
  1. Funding will support Phase III clinical trials starting in late 2026 for Hybridopa, an integrated pharmaceutical and software therapy targeting Parkinson's disease.
  2. Participating investors include NFX, Qumra Capital, and TechAviv, pushing total capital raised by the Ramat Gan biotech to $62 million.
  3. Co-development partnerships with global pharmaceutical leaders aim to prove adaptive digital interventions can directly improve neurodegenerative drug responses.
SourcesCTech: Remepy raises $36 million Series A as it prepares AI-driven Parkinson's treatment for Phase III (opens in new tab)

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