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IAI sets up $40m fund to adapt military drone, energy tech to civilian market

Israel Aerospace Industries partners with Neve Ilan-based AI robotics startup SixAI on new venture to commercialize defense capabilities

Ricky Ben-David is The Times of Israel’s Startups and Business editor and reporter.

An illustration of IAI's SatGuard’s simulation (Courtesy)
An illustration of IAI's SatGuard’s simulation (Courtesy)

Israel’s aerospace and aviation manufacturer IAI (Israel Aerospace Industries) has set up a $40 million (NIS 127 million) fund to adapt and commercialize some of its existing military technology for the mainstream civilian market, in partnership with Israeli AI robotics startup SixAI.

The first phase of the fund will focus on three core initiatives, according to the announcement: technologies for the production, extraction, and storing of energy; the development of commercial drones, including command and control platforms in urban environments; and the automation of production lines and autonomous machines in the manufacturing space, aka Industry 4.0.

The fund will be jointly owned and operated by both IAI and SixAI, based in Neve Ilan outside of Jerusalem and founded by Israeli tech entrepreneur Ran Poliakine, the maker of the Powermat wireless charging solution. Poliakine is also the founder and CEO of medical imaging company Nanox, which went public on the Nasdaq last year.

He founded SixAI in 2019 to provide industries such as semiconductor factories, retail, security, and agri-technology firms with AI robotics solutions. That same year, SixAI entered into a joint venture with Japanese company Musashi Seimitsu, an affiliate company of Honda Motor Corporation and a global maker of automotive transmission parts, to develop AI technologies for the so-called fourth industrial revolution, or Industry 4.0, which will see the automation and digitalization of the manufacturing process. The venture has been working on “fully autonomous robots” — a robotic forklift and a visual inspection robot — to integrate with human workers in a factory environment. And earlier this year, SixAI formed a venture with South Korean semiconductor test solutions provider ISC, and tech-focused investment company Yozma Group Korea.

Since 1953, the government-owned IAI has developed and manufactured advanced systems for air, space, sea, land, cyber and homeland security, providing tech solutions to government and commercial customers worldwide, including satellites, UAVs, missiles, weapon systems and munitions, unmanned and robotic systems, and radar. The firm is one of Israel’s largest technology employers with offices and R&D centers in Israel and around the world.

“IAI has one of the biggest ‘high-tech operations’ in Israel with some 15,000 employees — 10,000 of them in the engineering sector — $4.5 billion in revenue, $1 billion in annual R&D investment, and it’s a leader in patent registration,” said Hezi Israel, IAI VP and head of Business Partnerships.

Drone Guard technology developed by Aerospace Industries (IAI) (Courtesy)

The company is now widening its efforts to adapt military tech to the civilian market, having done so in recent years in the mining, agriculture, and cybersecurity sectors, Israel told The Times of Israel in an interview Wednesday.

According to the agreement, IAI and SixAI will work together to screen and identify technologies that can provide “real answers” for the civilian market in industries like food production, logistics, supply chain, medicine and health, manufacturing, and automotive, Poliakine said.

Last year, just as the COVID-19 pandemic was gaining pace across the world, IAI put its labs and engineers to work at finding ways to use some of its technologies in the medical field to help save lives.

The new fund will be used to set up startups in different fields that will advance these technologies for commercial purposes, Poliakine and Israel told The Times of Israel.

As a serial entrepreneur immersed in the so-called Startup Nation, Poliakine said the idea was to leverage SixAI’s network and knowledge of the market “and turn it into the vehicle that will take IAI’s tech into the civilian world.”

The Tactical Radar 2138 developed by Israel Aerospace Industries (IAI) can be easily transported and is able to provide 360 degrees coverage (Courtesy)

IAI has a “huge advantage” with existing advanced technologies that can be tapped to introduce game-changing solutions to help answer some of the world’s pressing humanitarian issues such as food shortage, climate change, and the future of work, said Poliakine.

He cited satellite tech currently used for defense purposes that can be adapted for agricultural use and monitoring of weather conditions and environmental changes; fleet management and logistics solutions “in which IAI is a leader” that can be useful for supply chain processes and manufacturing; quality assurance and precision procedures in missiles, aircraft, and other aerospace tech that can be adapted for the autonomous vehicles and machinery markets; military drones “which are silent and have energy-efficient long ranges” that can be used commercially; and advanced cyber and security technologies that can be used in the medical field.

SixAI founder Ran Poliakine, left, with Boaz Levy, president of IAI. (Courtesy)

“Nearly every technology is relevant to the civilian market,” Poliakine said.

Israel said IAI believes that “the next growth engine is in the civilian market. We have assets that we have been developing over time, we have unique technologies that are right in our laps. We believe that with a committed partner and funds, we can do much more than we are doing now. This [agreement] will allow us to focus on the defense side, and the partnership will focus on the civilian market.”

Israel said the initial stage of the agreement will take place over five years and he foresees a long-term partnership with SixAI where they will “increase funding sizes where needed and bring in private investors who have asked to join.”

Poliakine said one possible challenge will be the “culture gap” between a huge defense operation with thousands of employees and different processes and “young engineers from the startup world” who are more used to moving quickly and with agility. “But we can overcome this.”

Boaz Levy, IAI president and CEO, said in a statement that the company was “excited to form this partnership with SixAI” as part of its “new strategic roadmap of leveraging technologies and R&D capabilities to create dual-use technologies for commercial implementation.”

“IAI’s military technologies have contributed significantly to the security of the State of Israel, but have also been a source of technology diffusion that benefited the civilian market,” he said.

UPDATE: This article was updated to correct an error regarding the amount in the fund. It is for $40 million, and not NIS 40 million.

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