Opinion
The Arrow lands in Berlin, opening the door for Israeli high-tech
"Ultimately, the combination of Israeli creativity with German precision and discipline can evolve into a partnership that creates value for both sides and positions Israel more strongly on the European innovation map," writes Ron Abelski, partner at Epstein Rosenblum Maoz.
The Arrow deal, under which Israel is supplying Germany with a ballistic missile defense system, represents an exceptional security achievement and a symbol of the significant potential for cooperation between Israel and Germany, particularly in the fields of high-tech and innovation. The official ceremony held this month at a German Air Force base near Berlin, marks the delivery of the first operational system and illustrates how Israeli innovation can integrate with German precision to create a reliable and, advanced capability that crucially meets the agreed timelines.
This connection is not limited to the defense sector. The annual foreign investment report by the Chief Economist’s Office at the Ministry of Finance indicates a decline in global foreign investment in 2024, alongside a significant increase in the first half of 2025. While the United States remain the dominant source of investment in Israel, Germany stands out and is deepening its presence. The acquisition of WalkMe by the German software giant SAP for USD 1.5 billion is a prime example: Germany is seeking to accelerate its digital transformation and close gaps in artificial intelligence, automation, and process management, and the Israeli ecosystem provides exactly that.
Israel holds a clear comparative advantage: innovation, rapid deployment, and the ability to solve complex problems. Meanwhile, Germany brings what many Israeli companies struggle to achieve on their own: scale, integration into large organizations, industrial standards, and a regulatory environment that offers stability. A company that successfully embeds a product or platform with a major German client, gains not only revenue but also trust, which often translates into accelerated entry into additional European markets.
At the same time, Germany is undergoing a broad industrial and defense transformation that includes expanding security investments and procurement programs on an unprecedented scale, reshaping its local industry from air-defense systems to ammunition, logistics, and communication infrastructure. The 2026 procurement plan includes commitments of approximately €377 billion, aimed at closing gaps that have widened since the end of the Cold War. Within this procurement wave, Israel is already benefiting from the deepening technological and defense relationship, as reflected in the Arrow 3 deal valued at around €3.5 billion, while additional UAV and munitions deals strengthen its position as a supplier of advanced solutions.
The implications for Israeli high-tech extend far beyond defense. Germany’s growing demand for innovative solutions is rising across cybersecurity, smart energy, Industry 4.0, advanced mobility, and digital health. Alongside the recovery of German investments in 2024 and the acceleration in early 2025, a window of opportunity is opening to build long-term partnerships before entry barriers form and preferred vendors become entrenched.
From experience in deals with German corporations, the path from collaboration to investment or acquisition is not a single leap but a phased process: a focused pilot, commercial expansion, a minority investment with defined rights, and sometimes an option for acquisition in later stages. In Germany, what may sometimes be perceived as “technical” is often central to the deal, affecting the pace of due diligence, risk allocation, closing conditions, and ultimately valuation. Realizing the potential requires strategic thinking and commercial readiness from the outset: early planning for regulatory and information-security compliance, clarifying IP rights vis-à-vis customers and partners, defining product liability and SLAs, addressing cybersecurity and compliance issues, and establishing clear exit mechanisms. Those who handle these issues early shorten processes, reduce friction, and significantly increase the likelihood of closing.
Ultimately, the combination of Israeli creativity with German precision and discipline can evolve into a partnership that creates value for both sides and positions Israel more strongly on the European innovation map. For Israeli high-tech, Berlin is a gateway to a market that prizes depth, stability, and genuine partnership.
The author is Co-Head of the Corporate and M&A Department and Head of the German Desk at ERM.
