Defensetech is here to stay – even after the wars in Ukraine and Israel end

Israel’s defense industry isn’t a short-term “war hype” phenomenon. It’s part of a deeper global shift, a vast “blue ocean” of opportunity where the time to market, develop, and invest is now. The headline-grabbing sale of Israeli air defense systems to Germany is only the visible tip of the iceberg.

Today’s surge in defense investment isn’t driven solely by the conflicts in Ukraine and the Middle East. Around the world, rising defense budgets reflect a clash of combat doctrines across geopolitical blocs and a hard truth: technological superiority can decide the outcome of entire wars. The China-Iran-Russia-North Korea axis treats battlegrounds like Ukraine and Israel as live testing grounds, rapidly exporting whatever proves effective. Iranian systems, for example, may succeed only about 70% of the time, but their low cost enables strategic shockwaves, such as the 2018 drone strike on Saudi oil facilities that cost the global economy hundreds of millions of dollars.

Lital Leshem

By contrast, Western systems operate under far stricter standards, creating higher costs and longer timelines. That reality is pushing leading nations to move faster. Germany’s own wake-up call came in 2025, when it realized its military was underprepared for emerging threats and immediately allocated a special €100 billion upgrade budget. Across Europe, policymakers are shifting from slow, perfect solutions to rapid innovation adoption, driven by the uncomfortable question: Who’s next?

Meanwhile, “defense” itself is being redefined. It’s no longer limited to securing a nation’s skies; it now includes protecting hospitals, energy grids, water systems, and communications networks. In Israel’s recent confrontation with Iran, a direct strike on a hospital underscored the stakes. For many countries lacking Israel’s advanced defense arrays, such an event is a worst-case scenario.

The numbers tell the story. Ukraine’s defense spending has skyrocketed 832% since 2020, well before Russia’s 2022 invasion. Russia’s own spending is up 146%. NATO countries in Europe have collectively increased budgets by 50%. Israel (+28%) and the U.S. (+15%) have also ramped up, with more than a third of Israel’s new procurement dedicated to autonomous systems and AI. These aren’t one-off spikes – they reflect a global consensus that security, R&D, and technological innovation are now core strategic assets.

The takeaway is clear: security is no longer “insurance” for rare emergencies. It’s a cornerstone of sovereignty and economic stability. For investors, entrepreneurs, and tech leaders, this isn’t a passing cycle. It’s a durable, expanding market – one that will drive innovation, foster cross-border partnerships, and accelerate the fusion of defense and civilian technologies.

As AI, autonomy, and cyber solutions converge, the line between “high-tech” and “defense” is disappearing. Those who understand early that defense investment is a strategic imperative, not a fad, and who can pair cutting-edge tech with business agility will not only shape the battlefield, but also dominate the global market.

Lital Leshem is a Co-Founder and Managing Partner at Protego Ventures.