As Europe accelerates rearmament and Asian governments reassess their defense needs, Israeli technology, shaped by years of continuous conflict, is becoming a central component of procurement discussions.
For Alon Lifshitz, founder of Aurelius Capital, the shift is not theoretical; it is visible in the contracts, urgency, and the types of systems governments worldwide are looking for now.
“The question of dual‑use is gone,” Lifshitz said in an interview with The Report. “Investors and governments understand the need. They understand the importance. They understand the opportunity. Defense is no longer a side conversation.”
Demand, he added, is shifting from solely civilian markets to defense. “There is growing demand for core technologies that in the past were only sold to the civilian market,” he said.
The change is driven by a simple reality, he said: countries want systems tested under real operational pressure. Israeli companies, operating in an environment defined by the aftermath of October 7 and three years of continuous war, are producing technologies that have been validated in combat and refined at speed.
“Will there be more bombs and planes? Yes,” Lifshitz said. “But the technology has to get better. The pace of innovation is what matters.”
Going global
Aurelius Capital has been positioning itself to meet this demand.
The fund’s partners include Lifshitz, Tomer Jacob, former NSA director Michael Rogers, former IAF commander Maj.-Gen. (res.) Amir Eshel, and former Mossad deputy director Udi Lavi. The team’s combined expertise spans decades of strategic leadership in intelligence, cyber operations, and defense planning.
The firm’s team is central to its ability to identify opportunities quickly, Lifshitz said.
“Our partners have really proven the thesis,” he continued. “They can analyze opportunities in the defense sector in Israel and around the world. They’ve all been operators or commanders of thousands of people and in charge of major budgets. They understand technology and the geopolitical complexity of the time.”
The fund has been around for just over one year and has made several strategic deals since coming out of stealth, including a major SPV announcement in Germany.
Last month, the firm headquartered in Tel Aviv, New York, and London opened an office in Bangkok to cover the Southeast Asian market, where interest in Israeli innovation is growing rapidly.
Europe rearms
Across Europe, governments are rebuilding stockpiles, modernizing outdated platforms, and seeking capabilities that can be deployed immediately. Lifshitz said the demand is coming from both friendly and less friendly states, driven not by political alignment but by operational necessity.
“Diplomacy and populism are one thing; defending people and infrastructure is another,” he said. “European governments are generating very large contracts and actively looking for Israeli technology.”
On the day of the interview, Lifshitz said two European countries approached him – one aligned with Israel and one not – seeking Israeli systems valued at $20 million and $32 million. Both inquiries involved specific technologies, both software and hardware.
“At the end of the day, countries want what works,” he said. “They cannot ignore what Israel has. As geopolitical tensions rise, they understand they need to implement tech that is proven.”
Some deals are conducted directly with Israeli companies, while others are routed through third parties. In all cases, Lifshitz said, the motivation is the same: reliability, speed, and combat‑proven performance.
Since February, Aurelius has made six investments, with two portfolio companies nearly tripling their valuations. Lifshitz described the technologies they are backing as “deep tech, core technologies that are disrupting legacy systems or inventing a domain of their own.”
“The solutions are incredibly data‑rich,” he said. “The moat is not only technology but also data. As AI grows and becomes more substantial, it helps companies go to market.”
The Volkswagen deal
Beyond its fund investments, Aurelius operates an SPV platform that has launched three special‑purpose vehicles (also known as a special-purpose entity) this year.
The most widely discussed was the Volkswagen deal, which Lifshitz said opened the door to similar opportunities involving the conversion of manufacturing facilities and deployment of advanced manufacturing solutions.
In September, the German state of Lower Saxony, Rafael Advanced Defense Systems, and Aurelius Capital signed a letter of intent to purchase Volkswagen’s Osnabrück plant, allowing the Israeli defense company to establish the production of Iron Dome components in Germany.
The agreement will see the Volkswagen site in Osnabrück developed into a center of excellence for innovative security and defense solutions. It will combine German engineering expertise, industrial capital, and quality standards.
Aurelius played a key role in the negotiations and is expected to take over the site together with Lower Saxony and develop new business there.
“The whole supply chain management sector is important globally to fill the gaps in what’s missing,” Lifshitz said. “And there is a lot missing in the defense sector specifically.”
The SPV deals, he emphasized, are not limited to acquiring or investing in companies. “We implement solutions that we see in different verticals to optimize what we took over,” he said. “What we are doing today gives us a very unique opportunity for investors.”
Israel first
Despite its rapid global expansion, Lifshitz said Aurelius (founded after the October 7 Hamas-led massacre) remains focused on its original mission in Israel.
“We remain very focused on securing the future of Israel,” he said. “We are looking at delivering the best performance for our investors and generating revenues for the Israeli defense sector with new opportunities.”
Israel’s defense sector is developing at an unmatched pace, Lifshitz said: “Israelis are really number one in speed of development.”
“It comes from something very simple: the country has been at war for three years now. Israeli founders have a sense of mission after October 7. They are focused on protecting the future of the country, and Israeli tech is combat‑proven,” he shared.
Lifshitz contrasted Israel’s ecosystem with Ukraine’s, where wartime innovation is also emerging but under different conditions.
“Ukrainian innovation is its own,” he said. “But as an investor, there is no liquidity in Ukraine like there is in Israel. They have tech, but not the tech heritage or variety of technologies that Israel has.”
Lifshitz shared that Aurelius aims to help international partners understand that Israeli defense innovation “has many aspects to it and is already proven.”
“We will continue doing similar deals and expanding existing ones,” he said. “Our ability and access make Aurelius different in the investment sector. What we do helps us, helps our investors, and helps Israel.”■
This article was written in cooperation with Aurelius Capital.