How war has reshaped Israeli creativity, resilience, and the future of innovation

I have spent the last two days in quiet reflection praying for Israel, for the victims of October 7, and for the hostages, both those still with us and those whose memory now blesses the country. I chose silence over statements, prayer over politics. But as I sat in that stillness, another thought began to take root – how profoundly Israeli innovation has evolved under the pressure of war.

For nearly two years now, since that dark morning in October 2023, Israel has lived through unrelenting tests, from Gaza to the north, from Iranian missiles to diplomatic storms. And yet, amid all the noise and grief, something remarkable has unfolded: innovation has not only survived, it has transformed.

The war disrupted everything: engineers called to the front lines, investors retreating into caution, travel suspended, and start-ups left with missing founders. The Israel Innovation Authority was right when it called this period a “dual story”: stagnation in parts, but extraordinary renewal in others.

The numbers alone tell a story of resilience. In the first half of 2025, Israeli companies raised $9.5 billion across 367 funding rounds, up 58% from the previous half-year. Tech expanded by nearly 12%, even as the broader economy grew only 1.5%. Google’s record-breaking $32 billion acquisition of Wiz and Palo Alto Networks’ $25 billion buyout of CyberArk made headlines around the world. Those deals were not flukes. They were faith, investor faith in Israel’s unstoppable ingenuity.

War is a crucible that exposes both weakness and strength. For Israel, it has refined innovation itself.

When you walk through Tel Aviv’s startup clusters or peek into Haifa’s labs, you notice a new kind of energy. Start-ups no longer just build apps or fintech tools, they build survival systems. Reservists return from the battlefield with notebook sketches and sleepless ideas.

That is how companies like SkyHoop were born, a wearable device that alerts troops to incoming drones using mobile tech. Its creator, reservist Zach Bergerson, built it after watching soldiers rely only on their eyes and ears under fire. Within months, SkyHoop moved from field improvisation to a venture piloted in Ukraine and now eyed by the United States Department of War.

Another is Commcrete, a deep-tech marvel revolutionizing satellite communications. Founded by veterans of elite IDF tech units, its “Flipper” and “Stardust” systems ensure uninterrupted connectivity even when the skies are filled with interference. What began as a battlefield innovation now supports disaster relief teams and offshore industries around the world.

And then there’s Xtend, the startup behind the AI-powered indoor drones that helped Israel locate and target Hamas leaders deep underground. Their drones can be operated from 9,000 kilometers away, a symbol of how far Israeli ingenuity travels, literally and metaphorically.

These are not isolated success stories. They represent a pattern, one born of urgency, courage, and what I can only describe as creative defiance.

I have often said that Israeli innovation is less about technology and more about temperament. It is about people who refuse to give up when the sky is falling. This culture – the debriefs of the IDF, the flat hierarchies, the audacity to “challenge the chief” – all these have shaped an ecosystem where innovation is not a choice, but a reflex.

The Israel Defense Forces’ Directorate of Defense Research and Development (DDR&D) has worked with over 100 startups since the war began, awarding more than 780 million shekels in contracts. Over half of the anti-drone systems now used by the IDF come from small companies, not defense giants. That agility has made Israel the global benchmark for “battle-tested” technology, now eagerly sought by NATO and European governments racing to modernize their defenses.

Ironically, while rockets fell, investors returned. Venture capital once wary of defense tech now sees it as the future. Funds like Protego Ventures, led by reservist Lital Leshem, have raised $100 million to back emerging defense and dual-use startups. United States venture capital firms once hesitant about “risky” Israeli defense investments are now lining up to co-invest.

And beyond defense, the ripples reach every corner of the Israeli economy. New Era Capital Partners, for instance, closed a $120 million third fund during the war, all with foreign investors. Its founders call it a testament to “the extraordinary resilience, innovation, and grit” of Israeli entrepreneurs. They are right, of course. This generation of 20- and 30-somethings, who both defended the country and are now rebuilding it, embody resilience and renewal in the purest sense.

The story of Israel’s high-tech sector has always been one of overcoming, from post-embargo isolation in the 1970s, to hyperinflation in the 1980s, to the dot-com busts of the 2000s. But the current transformation feels deeper. It is not just economic; it is existential.

If the 1990s defined the “Startup Nation,” then the 2020s are shaping the “Resilience Nation.” The DNA of Israeli innovation is evolving, from peacetime optimization to wartime adaptation. Companies have learned to operate with scattered teams, broken supply chains, and founders working from bunkers. Remote collaboration has become second nature. Agility, once a cliché, is now a competitive advantage.

Yet, there are cautionary notes. The Israel Innovation Authority’s 2025 report warns of slowing job growth, a decline in new startup formation, and over-concentration in cybersecurity and enterprise software. Israel’s tech sector, responsible for 17% of GDP and more than half of exports, cannot afford stagnation. Dror Bin, the Authority’s CEO, calls this a “moment of truth”, a point where the government must act boldly to secure Israel’s innovation advantage.

Bin is right, of course. Resilience is not the same as inertia. To continue innovating the future of Israel, Israel needs public investment to match private brilliance especially in semiconductors, AI, energy, and quantum computing. These are the new frontiers where national security and economic prosperity intersect.

The world is watching, and buying. Israel’s defense exports reached a record $14.8 billion in 2024, with Europe accounting for over half. NATO’s new 5% defense spending rule, championed by the United States, has opened a massive European market hungry for precisely what Israel builds: field-proven systems that work when everything else fails.

This is where resilience becomes currency. Despite political backlash and boycott calls, buyers still want Israeli tech because it works. When one side wants the best, ideology gives way to practicality. As Brigadier General Yair Kulas put it, “In the end, they want to buy the best product possible.”

And that is what Israel delivers: the best product possible, forged under impossible conditions.

Every crisis in Israel’s history has left behind seeds of innovation. The Yom Kippur War gave birth to Unit 8200. The French arms embargo created domestic aerospace industries. The Second Intifada drove the rise of cybertech. And now, the Oct 7 war is birthing a generation of deep-tech innovators who blend AI, robotics, and defense systems in ways the world has never seen.

This is the paradox: fragility and resilience intertwined. Fragility in dependence on one sector and on reserve duty disruptions; resilience in the creativity of those who kept coding, designing, and dreaming under fire.

For me, the story of Israeli innovation is not just economic; it is emotional. It is about founders pitching to investors from makeshift offices. It is about engineers returning from reserve duty and jumping back into their start-ups without missing a beat. It is about a nation that invents because it must, because survival itself is a form of creativity.

And that is why I remain profoundly optimistic. The past two years have shown that Israeli innovation is not fragile; it is antifragile. It grows stronger with every test.

Israel’s innovation economy has endured one of the greatest stress tests in modern history. It bent, but it did not break. Out of disruption came new technologies, new ways of working, and, most importantly, a renewed sense of purpose.

Israel may still be at war, but in the labs of Tel Aviv, the workshops of Be’er Sheva, and the minds of reservists turned entrepreneurs, a quiet revolution continues – building technologies, rebuilding confidence, and, in the truest sense, innovating the future of Israel.