On October 7, 2023, Israel was jolted awake by the Hamas massacre.
This was a seismic event, not only in terms of the human toll and geopolitical reverberations, but also regarding how it catapulted the defense tech sector into a new era of urgency, introspection, and the mobilization of battlefield innovation.
Before the attack, Israel’s border with Gaza was considered one of the most technologically fortified in the world.
Surveillance drones, smart fences, AI-powered sensors, and remote-controlled turrets were deployed for the purpose of detecting and deterring threats.
The IDF boasted about how the southern border was impenetrable, yet Hamas exploited the gaps in the hi-tech armor to breach the border with devastating precision.
This exposed a critical vulnerability: Israel’s overreliance on automated systems, coupled with insufficient human oversight. The failure was not in the tech itself – it was in the strategic assumptions behind its deployment. It was a sobering truth that technology alone cannot guarantee security; it must be paired with human judgment and layered defense strategies.
Innovation under fire
In the months following the attack, the defense tech sector pivoted rapidly. Since October 7, its ecosystem has nearly doubled, going from 160 defense-related start-ups to 312.
Many of these companies were founded by reservists and tech professionals who experienced battlefield gaps firsthand.
In a recent Jerusalem Post interview with the CEO of Startup Nation Central, Avi Hasson, he said that the number of companies being created in one year alone was the equivalent of growing “on steroids,” with over 150% year-over-year growth.
“Around 20% of reserve soldiers, many of whom come from the hi-tech industry, are returning from service with a renewed sense of purpose, saying, ‘I don’t want to work in ad tech, I want to do something that is more driven by purpose,’” Hasson said.
The war catalyzed a surge in the defense tech sector across several domains. The following provides a list of some of them:
• AI and machine learning: Enhanced algorithms now prioritize anomaly detection and predictive threat modeling, especially regarding drone swarms and tunnel activity.
• Cybersecurity: With Iran, Hamas, and Hezbollah increasingly relying on digital warfare, Israeli firms have been doubling down on cyberdefense to protect both military and civilian infrastructure.
• Drone and counter-drone tech: New systems, including radar-agnostic detection and kinetic neutralization tools, have been developed to intercept low-flying drones.
• Battlefield robotics: Autonomous ground vehicles and robotic medics saw accelerated development to reduce soldier exposure in urban combat zones.
In other cases, existing start-ups pivoted into defense technology, repurposing civilian technologies for military use.
From logistics platforms to autonomous navigation systems, smart city platforms (tech that analyzes urban systems such as transit, commerce and facilities to create a comprehensive picture of city operations) were repurposed for real-time threat mapping, and health tech firms developed trauma triage tools – a process of evaluating patients who most need immediate, life-saving care – for battlefield use, to name a few.
Investment and global interest
Despite international tensions and calls for boycotts, the war galvanized support from foreign investors and defense-focused venture capitalists.
Initiatives like the Israel Tech Mission brought over 350 tech executives to Israel within two years, injecting tens of millions of dollars into start-ups focused on defense, homeland security, and dual-use technologies.
Shaun Maguire, a partner at Sequoia Capital, one of the world’s largest venture capital firms, expressed optimism about defense technology in Israel while speaking at the Mind the Tech NY 2025 conference, which was co-hosted by Calcalist and Bank Leumi.
“After October 7, we decided to double our commitment to Israel. We reopened our local office in January 2024, appointed a new partner, and I personally purchased a home in Israel,” Maguire said.
“I spend long periods there. Currently, the most prudent course of action is to invest in Israel, not just from a business standpoint, but also from a moral one. When others are pulling out, that’s when the best opportunities arise,” he told the conference.
Reflection and reform
Meanwhile, the IDF and policymakers have begun reevaluating their tech doctrine. The emphasis shifted from “tech-first” to “tech-enabled,” where human intelligence, decentralized command, and real-time adaptability are prioritized alongside digital tools.
There is also a renewed focus on ethical AI to ensure that autonomous systems used in combat adhere to international humanitarian standards.
The military has been heavily faulted for the Hamas October 7 massacre after failing to protect communities despite its advanced technology deployed on the border with the Gaza Strip. A former senior IDF officer acknowledged that “while there is no boundary to technology, you cannot disqualify the troops’ knowledge and experience.”
Looking ahead
October 7 was a brutal reminder that no amount of technology can fully insulate a nation from threats. It was a wake-up call for the country. Still, it also ignited a renaissance in defense innovation, one that combines cutting-edge technology with the blood-soaked experience and wisdom.
As Israel continues to navigate a volatile region, its defense tech sector stands not just as a shield but as a crucible for resilience.
Israel is the Start Up Nation after all.