Israel's Secret Weapon? How Defense Tech is Exploding!

Good afternoon. I'm Amy Shapiro, journalist at CEK, and we're here today at Mind the Tech London 2025. We're joined by Limo Ganot, uh, partner at Geffin Capital. Lemo, thank you so much for joining us. It's my pleasure. Thank you for having me. Oh, it's a pleasure to have you. So, to start off with, can you tell us a bit about yourself and what it is you do at Geffin Capital and a bit about Geffin Capital itself? Yes, happy to. So, Geffen Capital is a USI

investment fund. We invest in Israeli startups. Uh we are two partners in Israel, two partners in the US. We focus mainly on Israeli companies that view the US as their major target market. We have a very strong network there. So we have help our companies penetrate the US market and grow there. And uh it's it's it's specifically an interesting time now for such investments and such uh access to the US market. I think it's it's becoming even more and more important to be able to open doors there because it's not so trivial for Israeli companies to >> to go and and and offer their services and products in the US right now.

>> That and it's something I want to touch on in a bit. But I think start off with one sector that I'd love to uh that ask you about is is defense tech because I understand Geffin Capital has two investments there. Do you think that this sector is is going to grow? Yeah. So I mean it's we we we are a diversified fund. So we invest uh we have investments in our enterprise software, robotics, digital health and also two investments in defense tech. >> I think that these two investments in defense tech are completely different from any other investment that we've made. Uh it's it's a very it's you have to be it's a very specific sector with very specific characteristics >> and these character characteristics are actually changing. So if I go back two, three years ago when we first invested,

I think that we saw two main challenges in defense tech, the first challenge was the sales cycles. They're very long. >> You it's a B2G play. You don't only sell to governments, you also sell to armies. When you sell to armies, you have additional layers of complexity which you don't usually face as a as a startup. I'll give you an example. One of our portfolio companies is selling to the US military, the US army. So you had you had we had to establish a proxy board in the US with US citizens because you cannot have an Israeli board of a in a company that sells to the US army. Just you know just a kind of a taste of the additional complexities that you have. And so one is actually long sales cycles because you're selling to government, you're selling to armies and you have so many additional um regulations that you have to apply with. And the second challenge is for investors. >> Usually defense tech companies were valued based on EBIDA multiples. Now Ebida multiples are not what you we're used to. I mean when a company grows and grows fast then you usually look at revenue multiples. You look at much higher valuations. the these were the two challenges that I think the industry faced about 2 three years ago. I think that the landscape today is very much

different. I think that right now we're seeing two major changes versus the challenges that I described. The first is that sales cycles are much shorter because you have so many because of the and and the the geopolitical instability and the crisis that we're facing I think across the world. Then you have you have countries and you have governments and and and armies which are um grow their demand is growing tremendously. They're investing so much more in defense in general and in defense tech specifically. >> So sales cycles are much shorter now and companies are growing much faster now. So this also changes the other challenge that I addressed earlier and that was the multiples. instead of looking at eBida multiples, we're actually looking at revenue multiples, which makes investments much more interesting and much more lucrative for investors. So, kind of to summarize, I think that um

right now you can find really interesting investment opportunities in defense tech. But I but I would look at companies that mature within three to five years because shortterm, medium-term, I still think that the trends and the tailwinds that these companies are enjoying right now will continue. But I'm not sure that it's going to be for the long term. >> Okay. And and in terms of other

challenges and and opportunities looking at the Israeli uh high-tech sector, uh what do you see on the horizon and how are you as an investor preparing preparing for them? I think that the the opportunities are across the board in Israel. I think we continue to innovate. We continue to be leaders in so many industries. So I think that we have so many we have a lot of challenges. I think that the that Israel's um Israel is is is in a in in a bit from from a political perspective is in in a bit of a difficult situation, but I think that as Yo just mentioned earlier today, the Israeli high-tech is a bit, you know, is is not as affected as we would have expected when it comes to Israeli companies that are offering their uh solutions and and products uh globally. But I do believe that the trends that we

will see are uh Israeli companies unfortunately uh establishing US entities. That's unfortunately something that I'm seeing with our portfolio companies and I think that that is something >> that I would I would very much hope not to see in the in the long term. Well, it

kind of leads to my final question which is like uh uh Gavin Capital is a US-Israeli fund. So I think you have an interesting perspective on how uh the American leadership is affecting uh the global high-tech industry and then also how that kind of positions Israeli entrepreneurs. Yeah, I think that I mean

looking at the US is it's a very it's a it's a very general uh you know statement. I think that the US is so different. Every every state there is is a completely different universe. So it depends where where you know where you uh operate. I think that when we look at more Republican companies uh from a political perspective, I think that there is a lot of support for Israel, you look at other states, there is a bit less support for Israel. So, I think it's very it's the sentiment is mixed and it's very difficult now to say that it's going, you know, that it's positive or negative. But, but I think it definitely is something that needs to be taken into consideration when you decide how to approach the US market as an Israeli company. >> Well, thank you so so much for your time. It was very interesting talking to you today and I hope you enjoy the rest of your day here at Mind the Tech London. >> Thank you so much and same here.