Kinetica eyes $150 million to fuel Israel’s defense-tech surge

Another new Israeli venture capital fund specializing in defense tech investments is raising $150 million, Calcalist has learned. The Kinetica fund was founded by a group of former senior figures from Israel’s intelligence community and Air Force, together with venture capitalists from the MizMaa venture capital fund. According to estimates, some of the fund’s investors will be strategic entities that could also become customers for the startups’ technologies, or help them reach the global defense market, which is typically closed to small companies.

The fund’s founding partners are Yoav Knoll, a veteran of an elite Air Force unit; Aaron Applbaum of MizMaa; and Frederic Landau. The fund’s chairman is Applbaum’s father, Isaac Applbaum, one of the founders of Lightspeed Venture Partners in Israel, one of the world’s largest VC firms. Other partners include Maj. Gen. (res.) Saar Tzur, former commander of the IDF Northern Formation, and Brig. Gen. (res.) Amit Kunik, a former senior official in Israeli intelligence. Kinetica plans to invest from pre-seed to Series A, focusing primarily on defense-sector startups, but also on companies developing dual-use technologies for both defense and civilian markets.

Kinetica's founding partners.

Kinetica has already made three investments. Its largest so far is in Line 5, a startup founded by Gigi Levy-Weiss and Redis co-founder Yiftach Shoolman, which raised $20 million in its seed round just months after launching. This is the largest seed round in the global defense sector so far in 2025. Other investments include Particle, an Israeli startup specializing in electronic warfare and air defense capabilities, and LimitlessCNC, which develops digital control systems for precision manufacturing using CNC machines.

Kinetica is also expanding its reach beyond Israel by bringing senior U.S. figures onto its advisory board. These include former U.S. Navy Secretary Kenneth Braithwaite and former Senator Norm Coleman, who is known for his ties to the American defense establishment. The fund has also recruited Joe Lonsdale, co-founder of the American defense-tech giant Palantir (valued at $300 billion on Wall Street) and founder of 8VC, which was among the first backers of Anduril, the prominent defense startup now valued at $30 billion.

Kinetica joins a wave of Israeli venture capital funds launched since the outbreak of the war on October 7, aiming to leverage recent military developments for economic growth and the creation of a robust, defense-focused industry, similar to Israel’s success in cybersecurity. As part of this trend, some observers already warn of a potential bubble: new players include Protego Ventures, founded by Lital Leshem and Lee Moser, and ACE, founded by former Air Force Commander Amikam Norkin. Leading U.S. funds have also stepped up their activity in Israel’s defense sector, including Andreessen Horowitz, Sequoia, the CIA’s venture arm In-Q-Tel, and Lux Capital, which invested in Israel for the first time since the war began.

Israel’s recent operation in Iran, credited to its technological edge, has further fueled investor interest. NATO’s decision last week to double member defense budgets amid Russia’s war in Ukraine and fears of further aggression by Putin adds momentum. This trend is also reflected in rising shares of defense companies such as Israel’s Elbit Systems, whose stock has soared 65% since January. The share rally allows these companies to expand R&D budgets and invest in emerging technologies. Another driver is growing interest from Gulf states in Israeli defense technology and expectations for an expansion of the Abraham Accords.

Still, the main challenge for venture funds betting on defense tech remains the sector’s limited history with private capital. Development and procurement timelines are long, and exit opportunities are constrained to a small number of players in the global defense industry.