Acquisition Trends and Investment Growth in Defense Technology Sector

In 2025, Israeli defense-tech startups have drawn considerable attention from investors, securing over $1 billion in funding. This trend highlights a broader pattern of growth and innovation within the defense technology sector, attracting significant interest from investors around the world.

Investment Surge in Israeli Defense-Tech Startups

Israeli startups are emerging as key players in the global defense technology landscape, with a marked increase in investment activity. These startups have attracted over $1 billion in funding in 2025 alone, underscoring a strong market confidence in the capabilities and innovations emerging from the region. This influx of capital supports a variety of technological advancements, particularly in cybersecurity and advanced defense systems.

Investors are showing a growing interest in defense technology innovations, which is reflected in the substantial capital being directed towards Israeli tech companies. The focus on cybersecurity and cutting-edge technologies positions these startups at the forefront of global defense tech, contributing to their appeal among international investors.

Mergers and Acquisitions Reflecting Market Confidence

Mergers and acquisitions (M&A) are a common strategy within the defense industry, often indicating market confidence in specific sectors. In 2025, increased consolidation is expected in the defense-tech market, driven by strategic acquirers pursuing both platform and tuck-in acquisitions. This M&A activity is further bolstered by the stabilization of interest rates, which has accelerated acquisition efforts across the sector.

Among notable developments, NUBURU, a company expanding into the defense-tech and security sectors, has announced plans for a phased acquisition of Tekne. The initial stage involves securing a 3% equity interest, with plans to acquire the remaining 67% by the end of 2025. Tekne's portfolio, valued at approximately $500 million, is an attractive target within the burgeoning electronic warfare market, which is projected to reach $19.4 billion by 2028.

Strategic Expansion into Defense and Security

NUBURU's acquisition strategy is part of a broader initiative to establish a Defense & Security Hub, focusing on strategic acquisitions within the defense technology sector. In addition to Tekne, NUBURU is also pursuing a controlling interest in Orbit, a SaaS startup. These acquisitions are aimed at enhancing NUBURU's capabilities and footprint within the defense-tech industry.

The strategic expansion into defense technology is indicative of a larger trend within the sector, as companies seek to bolster their technological offerings through targeted acquisitions. This approach not only enhances their market position but also aligns with the growing demand for advanced defense technologies globally.

Outlook for the Defense-Tech Market

The defense technology sector is poised for continued growth, supported by robust investment activity and strategic acquisitions. As interest rates stabilize, M&A activity is expected to maintain its momentum, with strategic acquirers looking to capitalize on emerging opportunities within the market.

Reports analyzing acquisitions in 2025 suggest that the defense-tech market will experience increased consolidation, driven by the need for integrated and comprehensive defense solutions. This trend is likely to fuel further investment and innovation within the sector, reinforcing the pivotal role of defense technology in global security strategies.

The Israeli defense-tech sector's ability to attract over $1 billion in funding in 2025 underscores its significance in the global market, with cybersecurity and advanced technologies at the forefront of this growth.