New $50 million Texas fund to scout for battle-tested Israeli defense tech
Texas Venture Partners will invest $1 million-$4 million in early-stage defense tech startups and support local founders with advisory services to help them expand to the US
A group of Texas-based and Israeli entrepreneurs have raised $50 million to create a new fund to invest in Israeli early-stage defense tech startups and help them expand their footprint to US markets.
Founded in the wake of the October 7 onslaught by the Hamas terror group on southern Israel, Texas Venture Partners (TVP) said it closed its debut funding round on the symbolic date of July 10 (7/10).
The Austin, Texas-based fund plans to invest between $1 million to $4 million into early-stage Israeli defense tech startups. Led by two Austin-based entrepreneurs, Canadian businessman Lorne Abony, and Israeli-born Tal Shmueli, the fund will provide startups with professional mentoring and financial stewardship to advance their development and help expand their business operations to Texas.
“After October 7th, it became even clearer that Texas was the most business-friendly, values-aligned and welcoming place for Israelis and Jewish founders to start and grow their businesses in,” said TVP managing partner Shmueli. “Israeli entrepreneurs are returning from the war with an intimate understanding of the modern battlefield and its challenges.”
“They have the skills and motivation to solve them,” he remarked.
Shmueli told The Times of Israel that the fund will be selecting Israeli startups that develop technologies that have “immediate impact on the battlefield or a strategic, long-lasting influence on national security.”
The fund will be scouting for Israeli tech and systems that match the needs cited in the US Department of Defense list of 14 critical technology areas to maintain national security. The areas include biotechnology, quantum science, trust AI and autonomy, space technology, and renewable energy.
Israel is almost 10 months into a war following the October 7 onslaught by Hamas, in which terrorists killed some 1,200 people in Israel’s south, most of them civilians, and abducted hundreds of others. In response, the Israeli army called up hundreds of thousands of reservists to join the fighting, including thousands of tech entrepreneurs and employees of startups and tech firms. The callup presents challenges, especially for Israeli early-stage startups, who in the absence of key personnel, are struggling to run their daily operations and are grappling with attaining critical funding for their survival.
“The same caliber of innovation that existed in Israel before the war broke out is available today, but with only a fraction of the available capital – we created TVP to change that,” said TVP general partner Abony. “Israel is a tech superpower that has been innovating in the defense tech space at a rapid pace since the commencement of the war.”
“We are the only venture capital firm with a unilateral focus on defense tech, an industry experiencing unprecedented disruption with the trend towards asymmetric warfare,” he stated.
Geopolitical changes and security threats around the world starting with the Russian invasion of Ukraine and amplified by Israel’s war with Hamas in Gaza have sparked greater interest in defense technologies luring investor appetite for solutions that answer evolving needs, for both, military and civilian applications.
Israel is home to about 160 companies in the defense tech space that address critical challenges in air defense, homeland security, aviation, dual-use applications, and space technologies, according to Start-Up Nation Central (SNC), a nonprofit organization that tracks Israel’s tech industry.
Earlier this week, SNC created what it described as Israel’s first defense tech landscape map of local startups within the defense tech ecosystem as interest by investors has been gaining traction. It maps local startups according to different defense tech subsectors including, combat equipment and systems, unmanned systems, security and surveillance integration, simulation and training, defense electronics, and aircrafts and avionics.
“As the global security landscape continues to shift, Israel’s defense industry is well-positioned to address the challenges and seize the opportunities presented,” said SNC’s chief business officer Giora Shaked. “Two key trends are driving startups toward the defense sector: First, the development of small and smart solutions that can be prototyped and developed by small teams rather than large projects requiring vast teams and facilities.”
“Second, the economics of software and IP-based solutions versus hardware integration allow startups to achieve high gross margins with rapid growth models, aligning well with venture capital investment preferences,” Shaked remarked.
Among TVP’s limited partners are Texas oil and gas explorer and investor Bud Brigham. Former US Deputy Assistant Secretary of Defense for Middle East (DASD) Simone Ledeen joined the fund’s team as a partner.
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