Author: Techtime

Elron and Rafael to Commit Up to $300 Million for Acquisitions of Defense and Dual-Use Technology Companies

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Elron Ventures, controlled by the Arieli Group, announced on Monday that its board of directors has approved, in principle, an investment program of up to $300 million through RDC, the joint venture owned by Elron and Rafael Advanced Defense Systems. The initiative is designed to support the mergers and acquisitions strategy that Elron introduced in March and will focus on acquiring controlling interests in technology companies serving both defense and commercial markets.

Under the plan, Elron and Rafael are expected to commit up to $300 million over approximately three years, with each party contributing an equal share. The initial allocation is expected to reach up to $100 million, with Elron and Rafael each providing up to $50 million. The program remains subject to approval by Rafael’s board of directors and the completion of the required financing arrangements.

The move marks a significant expansion of RDC’s activities. Until now, the partnership has primarily operated through venture capital investments, startup creation, and the commercialization of technologies developed within Rafael. Under the new strategy, Elron and Rafael intend to complement these activities by acquiring controlling stakes in established companies, with the goal of building a portfolio of growth-stage businesses in defense technology, cybersecurity, deep-tech, and artificial intelligence.

According to the company, rising defense budgets worldwide and shifting geopolitical dynamics have created growing demand for technologies that serve both military and civilian markets. Elron believes that combining Rafael’s technological and operational expertise with Elron’s experience in investing in and scaling technology companies could create a new growth engine for both partners.

In a separate announcement, Elron said it is exploring the possibility of issuing a public bond offering, and potentially warrants as well, to finance its share of the investment program. The size, structure, and timing of any such offering have not yet been determined.

[Photo credit: Shay Ben Efrayim]

Israeli High-Tech is Growing – and Moving Abroad

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Israel’s high-tech sector returned to a growth trajectory in 2025, delivering one of the strongest years in its history. At the same time, however, the industry is showing early signs of structural changes that could shape its future, according to the Israel Innovation Authority’s 2026 State of High-Tech Report.

According to the report, Israel’s high-tech GDP grew by 8.2% in 2025, reaching NIS 352 billion. The sector’s share of national GDP rose to 18.3%, and high-tech accounted for roughly half of Israel’s overall economic growth during the year. High-tech exports reached a record $85 billion, representing 58% of the country’s total exports.

The capital market also saw a strong recovery. Israeli technology companies raised $14.6 billion in 2025, up 30% from 2024, while total exit value reached $84 billion, driven in part by major transactions involving Wiz, Armis, and CyberArk. Israel ranked fourth globally in startup funding and remained the leading startup hub outside the United States.

One of the report’s most notable findings is a shift in the industry’s growth drivers. While software companies led the sector throughout much of the past decade, the main engine of growth in 2025 was hardware, electronics, and advanced manufacturing. The hardware industry contributed approximately NIS 16 billion in additional output within a single year — an unusually sharp increase compared to recent years. The Innovation Authority links this trend to rising investment in deep-tech sectors, AI infrastructure, semiconductors, space technologies, and defense technology.

The report also points to early signs of artificial intelligence reshaping the labor market. For the first time in a decade, the number of R&D employees in Israel declined, falling by approximately 3,500 workers. At the same time, the number of product-related roles increased by roughly 15,000. The Authority suggests this may represent the beginning of a structural shift driven by AI-powered productivity gains in software development.

Despite the industry’s strong business performance, the report highlights a concerning trend: the gradual relocation of activity outside Israel. The share of employees working in Israel for Israeli high-tech companies fell from 69% in 2019 to just 62% by March 2026. Most of the growth occurred in the United States, not only in sales and marketing functions but also in R&D positions and senior management roles.

The Innovation Authority warns that the key challenge for the coming years will not only be maintaining Israel’s capacity for innovation, but ensuring that this innovation continues to generate jobs, economic value, and long-term growth within Israel itself.

Smart Shooter Wants to Turn the Infantry Soldier Into an AI Platform

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Israeli defense-tech company Smart Shooter published its first quarterly report today since going public on the Tel Aviv Stock Exchange, offering a deeper look into one of the Israeli firms seeking to capitalize on the dramatic transformation of the modern battlefield in the wake of the wars in Ukraine and the Middle East.

But beyond the financial figures, the report and accompanying investor presentation also reveal the company’s broader strategic vision: Smart Shooter no longer presents itself merely as a manufacturer of “smart sights,” but as a company aiming to “reinvent infantry” through AI-powered fire-control systems, counter-drone capabilities, and autonomous weapon stations.

The company, developer of the SMASH family of systems, reported first-quarter revenue of approximately $6.6 million, up 26% year-over-year. The standout figure, however, was the sharp increase in bookings: during the quarter, Smart Shooter signed new contracts totaling roughly $17.65 million, representing a 396% increase compared to the same quarter last year. As of May 20, the company’s order backlog had already reached approximately $49 million.

The results indicate that the company is transitioning from the pilot and trial phase into serial procurement programs with military and security customers. Key contracts announced this year include a $10.7 million order for the U.S. Army, additional SMASH 3000 deals in Europe and Asia, and an Israeli Ministry of Defense order for the Hopper Smash system.

In its investor presentation, Smart Shooter emphasized that its systems are already operational with “Tier-1 armies” worldwide, and that the company has been designated as an approved supplier under the U.S. Department of Defense’s I-40 JIATF framework — a status that could pave the way for broader procurement programs in the American market.

Rising Demand From Asia-Pacific

One of the most interesting aspects of the presentation is the way Smart Shooter positions itself within the defense market. The company highlights two primary product lines — soldier-portable systems and remotely operated weapon stations — both built around what it describes as “one technological core.”

In practice, this means an AI and computer-vision engine capable of target detection, tracking, ballistic calculations, and precision fire control for both individual soldiers and autonomous firing stations, ground robots, and border-defense systems.

The company is also attempting to position itself as a key beneficiary of the global surge in counter-drone spending. In the presentation, Smart Shooter points to the “growing need for kinetic defense systems against drone threats, including fiber-optic drones,” alongside rising global defense budgets.

While Europe still serves as the company’s primary revenue engine — accounting for 55% of actual sales in the first quarter — the presentation suggests that future growth is increasingly shifting toward Asia-Pacific and North America. According to the company, 45% of new bookings signed during the quarter came from Asia-Pacific, compared to 38% from Europe and 17% from North America. However, the broader order backlog remains more balanced: Europe accounts for 35% of the backlog, North America 33%, Asia-Pacific 20%, and Israel just 11%.

Although Smart Shooter still posted a GAAP net loss of approximately $6.6 million, most of it stemmed from one-time IPO-related expenses and commitments tied to the Israeli Ministry of Defense. Excluding these items, the company nearly reached operational breakeven, reporting positive adjusted EBITDA of approximately $38,000.

The IPO itself significantly strengthened the company’s balance sheet. As of the end of the quarter, Smart Shooter held roughly $82 million in cash and short-term deposits. In the presentation, the company stated that it plans to expand its sales and maintenance operations in the U.S. and Europe, shorten delivery times, and deepen the integration of its systems with military command-and-control networks.

ThirdEye and High Lander Integrate Drone Detection Systems

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Israeli defense technology company ThirdEye Systems announced a strategic cooperation agreement with High Lander Aviation focused on unmanned traffic management (UTM) and drone detection technologies.

Under the partnership, ThirdEye’s MeduzaX optical drone detection system will be integrated into High Lander’s Vega platform, which is used to manage and monitor drone traffic in low-altitude airspace.

According to the companies, the technical integration phase has already been completed, and the joint platform is now moving toward commercialization and deployment. The combined system is designed to provide airports, ports, utilities, government agencies, and critical infrastructure operators with a unified operational picture of drone activity — including both compliant drones broadcasting identification signals and “non-cooperative” drones that do not transmit identification data.

High Lander’s Vega platform functions as a drone traffic management system that enables authorities and operators to coordinate, monitor, and authorize drone flights. In recent years, the company has participated in multiple UTM projects internationally and promotes a broader vision of a digital operating system for low-altitude airspace, including future support for autonomous aircraft and air taxis.

ThirdEye’s MeduzaX system, meanwhile, is an AI-powered electro-optical and thermal drone detection platform designed to identify and track small, hard-to-detect drones using cameras and computer vision algorithms. Unlike radar or RF-based systems, MeduzaX operates passively without emitting signals, making it suitable for environments where low-signature detection is required.

The collaboration reflects a broader trend in both the drone and counter-UAS markets: a shift away from standalone detection or traffic management systems toward integrated platforms combining sensors, analytics, command-and-control, threat assessment, and in some cases interception capabilities.

As drone activity continues to expand across both civilian and military sectors, governments and infrastructure operators are increasingly seeking systems capable of managing crowded low-altitude airspace while simultaneously detecting unauthorized or potentially hostile drones in real time.

[Lior Segal, founder and CEO of ThirdEye Systems]

BIRD Foundation Awards $7.5 Million to U.S.-Israel Projects in AI, Cybersecurity and Healthcare

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The BIRD Foundation, the U.S.-Israel Binational Industrial Research and Development Foundation, announced $7.5 million in funding for seven collaborative projects between Israeli and American companies.

According to the foundation, the participating companies are also expected to secure additional private-sector financing, bringing the total investment across the projects to approximately $20 million.

The newly approved projects span a range of sectors including AI-driven agriculture, cybersecurity, food technology, precision medicine, and mental health.

Among the selected initiatives, Israeli startup Brevel and U.S.-based Ayana Bio will work on a commercial-scale process for producing bioactive plant compounds using illuminated fermentation technology. In cybersecurity, Ensights AI Renewable Energy and Solitude Labs will collaborate on cyber protection technologies for operational technology (OT) systems used in critical infrastructure environments.

In the agtech sector, Greeneye and Nutrien Ag Solutions will develop an AI-powered precision spraying platform designed for commercial crop spraying contractors. In animal health, HT Vet and VCA Animal Hospitals will jointly develop a non-invasive scanning technology for detecting skin and subcutaneous tumors in cats while expanding diagnostic capabilities for dogs.

Additional projects include a prenatal diagnostic platform for monogenic diseases based on cell-free DNA (cfDNA), developed by Identifai-Genetics and Inocras; a cell therapy program targeting progressive multiple sclerosis by Neurogenesis and OrganaBio; and a precision medicine-based platform for personalized depression treatment developed by NeuroKaire and MindfulCare.

Founded nearly five decades ago, the BIRD Foundation was established to promote industrial R&D collaboration between Israeli and American companies. According to the organization, it has supported more than 1,200 joint projects since its inception and invested over $465 million, helping generate more than $10 billion in direct and indirect revenue.

Quantum Machines Achieves Record Performance on Rigetti Quantum Processor

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[Photo: Quantum Machines founders. Credit: Ilya Melnikov]

Quantum Machines (QM) announced that it successfully operated Rigetti Computing’s Novera quantum processor using its own control and calibration platform, achieving a median two-qubit gate fidelity of 99.5% — one of the key benchmarks for quantum computer performance.

According to the company, this marks the highest full-system performance achieved to date on a Novera processor using an external control system. While Quantum Machines’ platform already interfaces with a broad range of quantum systems across the industry, the significance of this project lies in the fact that QM was able to bring Rigetti’s processor to the manufacturer’s own target performance levels using a fully external control stack.

Rather than building qubits themselves, Quantum Machines focuses on the orchestration, control, and calibration layers of quantum computers. Its OPX1000 platform provides real-time control hardware capable of generating highly precise pulses, synchronizing quantum operations, and optimizing system behavior to reduce error rates. The company also developed QUAlibrate, an automated quantum calibration framework designed to dramatically reduce the time and complexity involved in tuning quantum systems.

Rigetti, one of the better-known public quantum computing companies in the U.S., develops superconducting quantum processors and full-stack quantum computing systems that combine hardware, software, and cloud infrastructure. Its Novera platform is a commercial 9-qubit quantum processor designed for on-premise deployment in research and development environments.

As part of the project, a Quantum Machines team working onsite at Rigetti operated the processor using OPX1000 hardware and QUAlibrate software, achieving 99.93% median single-qubit gate fidelity and 99.5% median two-qubit gate fidelity across all available qubit connections.

Beyond the technical milestone, the announcement highlights a broader shift taking place in the quantum computing industry: a gradual move away from tightly integrated proprietary systems toward more modular architectures where processors, control systems, and software stacks from different vendors can interoperate. In practice, this could eventually enable organizations to combine quantum hardware and orchestration technologies from multiple suppliers without sacrificing performance.

Founded in 2018, Quantum Machines has raised approximately $280 million to date and says its technology is now used by more than half of the companies developing quantum computers worldwide. The company also collaborates with NVIDIA on hybrid quantum-classical computing systems.

IMCO Begins Manufacturing on European Soil

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IMCO Group (TASE: IMCO) announced today that it has begun delivering operational systems through serial production at its Romanian subsidiary, IMROD—marking the transition from facility setup to full-scale manufacturing operations in Europe.

The move enables IMCO to operate as a local manufacturing partner for European customers, shortening delivery times, improving supply chain flexibility, and aligning with regional regulatory requirements. It is also expected to enhance the company’s ability to compete in European defense tenders, where local production capabilities are often a key requirement.

IMROD supplies integrated systems for mission-critical applications across a range of defense platforms, with a focus on armored vehicles and air defense systems. According to the company, operations comply with European Mil-Spec standards and local regulations, while offering engineering, integration, and support services to customers in the region.

The Romanian facility, first announced in September 2025, was designed to support both IMCO’s existing order backlog and growing demand in the European defense market, driven in part by rising defense budgets across the continent. At the time, the company emphasized that a European presence would allow it to qualify as a “local supplier” and deepen collaboration with platform manufacturers and system integrators.

IMCO’s defense activity focuses on electrical, electromechanical, and control systems deployed across a wide range of platforms, including armored fighting vehicles, main battle tanks, and fighter aircraft. The segment has become a key growth driver: in the first half of 2025, the company reported a 24% increase in revenue to approximately NIS 158.5 million, with defense-related sales rising 41% year-over-year.

According to CEO Ariel Kendel, the shift to full-scale operations in Europe allows IMCO to work closer to its customers and support programs in line with European industrial and regulatory frameworks, while also aligning with regional initiatives aimed at strengthening defense manufacturing and ensuring supply continuity.

The company added that the Romanian site has significant expansion potential, including plans to increase its footprint and grow its engineering and technical workforce, as part of IMCO’s broader global growth strategy.