VC Survey 2026
“It may feel uneasy, but letting software act independently isn’t optional, it’s necessary for survival today”
Frederic Landau, general partner at Kinetica, joined CTech for its 2026 VC Survey.
“People running modern operations will tell you that trust, not computing power, is the real bottleneck. The first area in defense to become fully autonomous will be where even a brief human delay could mean losing the mission. In fields like electronic warfare or cyber, events happen in milliseconds. By the time a person reacts, it’s often too late,” said Frederic Landau, general partner at Kinetica, when asked which specific vertical will be the first to fully trust AI with independent decision-making.
“That’s why there’s a move from humans being 'in the loop' to being 'on the loop.' Machines act on their own, while humans supervise. It may feel uneasy, but in these fast-paced areas, letting software act independently isn’t optional, it’s necessary for survival today.”
Following the turbulence of recent years and the stabilization of 2025, the Israeli tech ecosystem is entering a new era: The Next Leap. Landau joined CTech to share insights for its VC Survey 2026.
You can read the entire interview below.
Fund ID
Fund Name: Kinetica
Total Assets Under Management: Raising $150M
Partners/Managers: Frederic Landau, Aaron Applbaum, Yoav Knoll, Yitz Applbaum, Maj. Gen. (res.) Saar Tzur, Brigadier General (res.) Amit Kunik
Notable Portfolio Companies: Particle, Line5, Limitless CNC
Notable Exits: N/A
The Valuation Leap: Moving past the market correction, what is the single most critical metric (e.g. EBITDA, NRR) that will drive premium valuations in 2026?
The biggest shift in defense today isn’t just about new hardware, it’s about how we think about people. The top companies now see every engineer, operator, and analyst as someone who can control not just a few machines, but thousands. With software-defined systems, one person can manage swarms of drones, underwater vehicles, or missile batteries that used to need large teams.
This is why militaries are changing what they pay for. Instead of focusing on headcount or expensive platforms, they want to buy human hours that turn into real outcomes like surveillance, coverage, deterrence, or strikes, delivered by scalable machines. In this environment, the best startups are those that help small teams achieve industrial-scale impact.
The Sovereign Leap: Have the geopolitical lessons of recent years pushed Israeli startups to build independent, 'sovereign' tech stacks to reduce reliance on global platforms?
Most civilian startups still rely on AWS or Google Cloud, which makes sense for them. But Israeli defense-tech companies are working with different assumptions. They plan for situations where the cloud could be unavailable, GPS might be jammed, or software updates could be blocked by politics. So they design everything to keep working no matter what.
This is what 'sovereign-by-default' means. In Israel, it means they aren’t at risk if someone else cuts off digital access. Internationally, it shows these systems have no hidden off-switches. You can use them anywhere without worrying about interference from Silicon Valley or Washington.
The Efficiency Leap: In the era of AI-driven hyper-productivity, is the traditional correlation between 'Headcount Growth' and 'Company Success' permanently broken?
When people mention the 'efficiency leap,' they mean a shift from the old way defense scaled. For a century, more output meant hiring more people. Now, one engineer can control thousands of affordable, autonomous systems. This is non-linear lethality: strength comes from software, not just adding more people.
Success is no longer about the size of your battalion, but about the real-world impact you achieve for each dollar spent. This only works if machines are truly cheaper than the people they replace. If you swap soldiers for high cloud costs, outsourced computing, or pricey hardware, you lose the cost advantage that makes autonomy valuable. In that case, you haven’t made war more efficient, you’ve just shifted the expense from payroll to operating costs.
Software-defined warfare only works if you lower costs across the board: compute, hardware, energy, and logistics. If you don’t, autonomy becomes too expensive to sustain, no matter how advanced the technology is.
The Contrarian Leap: What is one sector or trend currently ignored by the herd that you believe represents the most undervalued opportunity for the coming year?
Sovereign industrial infrastructure for software-defined defense is becoming the most important part of the ecosystem. Not because it’s hidden, but because it’s often overlooked. This includes factories, computing, electronics assembly, and supply chains that allow autonomous systems to be built, repaired, and upgraded within a contested homeland. Without this foundation, all the AI and drones are just fragile prototypes.
Some investors hesitate because this doesn’t match the usual venture model. It involves capital expenses, physical assets, and longer timelines, which can feel unfamiliar to funds used to software investments. But in modern warfare, the key factors are cost trends, production speed, and the ability to keep going during disruptions.
The good news is, this doesn’t have to be funded like a typical startup. By combining venture equity, sovereign financing, long-term defense contracts, and asset-backed debt, you can build a capital structure that works for both founders and investors. This approach also gives the defense ecosystem the industrial strength it needs.
Finally, name 2-3 startups that, in your opinion, are likely to make a leap forward this year.
Particle (portfolio company) - One of our early stealth-mode investments is nearing a key validation milestone this year, advancing an advanced energy-based platform from theory to reality. It offers a new economic and operational model.
LimitlessCNC (portfolio company) - LimitlessCNC integrates artificial intelligence into the workflows of CNC machinists. In 2026, as pilot programs transition to annual contracted revenue, LimitlessCNC is expected to progress from validation to achieving scaled impact throughout the defense industrial base.
