The Decade Ahead Will See a Significant Rise in Military Equipment Acquisition

"Since October 7, we've realized more clearly than ever that we must enhance the capabilities of soldiers in the field, as well as those of border communities and security forces," says Avi Braun, deputy CEO of Capture Systems. "We can't rely solely on our aerial defense systems. Even the Iron Dome can't handle every threat, nor can the military be omnipresent. Border communities must deploy increasingly sophisticated observation systems."

Capture identified the potential of intelligent detection several years ago and began developing solutions. Among them is its CapGuard™ system, which can detect a range of UAVs (unmanned aerial vehicles). The system is currently undergoing trials by security agencies and customers both in Israel and globally.
Bluntly put, global tensions and conflicts drive up demand for defense industries. The aerospace sector, for instance, saw IAI report a remarkable first quarter for 2024, marking its best-ever performance. Ending 2023 with record-breaking results, the industry now faces its largest-ever order backlog, totaling some $19 billion—a 48 percent increase on the same quarter last year. Net profit soared from $91 million to $135 million, reflecting a similar 48 percent rise, with positive cash flow from operations approximately $1.68 billion. Like other defense industry leaders—Rafael Advanced Defense Systems, Elbit Systems, and Israel Aerospace Industries—Capture Systems has witnessed a significant uptick in activity.

Capture develops and manufactures video and radar-based tracking systems, command and control systems, electro-optical systems, weapon mounts for armored vehicles, and UAV detection and tracking systems. In recent years, characterized by global military conflicts, the demand for the company's products has increased by approximately 40% annually, with expectations to triple by 2025. "And this is just the beginning," estimates Avi Braun, the Deputy CEO. "We anticipate that the coming decade will be marked by extensive military acquisitions, and what we have seen so far is only a small part of what is expected."

Have the events of October 7 played a role in this expansion?

"Since October 7, we've recognized the urgent need to enhance the capabilities of soldiers in the field and border security units, beyond relying solely on aerial defense systems," says Avi Braun, Deputy CEO of Capture Systems. "The Iron Dome faces challenges in addressing every threat. Soldiers and security units must be equipped with technologies and solutions that support them until main forces arrive. There is also an urgent need for increased protection against both ground and air threats in the short and medium terms."

"In our assessment, the concept of aerial defense has evolved in light of recent events," he continues. "Border communities will increasingly need advanced observation systems, as the army cannot be everywhere at once. There is a growing global recognition of the need to prepare for security threats similar to what Israel experienced on October 7. It made clear to the world that danger can emerge suddenly and from anywhere."

Responding to 'smart' threats

Capture Systems was founded in 2008 by Shay Geva, a veteran defense industry entrepreneur and mechanical engineer. He recognized the necessity of specializing in drive and control systems, and his background in mechanical engineering and control systems paved the way for a range of solutions tailored to the defense industry.

Braun's background is equally rich. Prior to joining Capture in 2023, he was Vice President at Commtact — an Aeronautics Ltd. subsidiary specializing in unmanned solutions for military and civilian markets — and later created and headed a subsidiary of AST SpaceMobile based in the USA.

Capture has been working on Anti-Threat Intelligent Detection (ATID) for several years. One solution it has developed is its CapGuard™ system, which detects various types of UAVs. It is currently being tested by defense systems and customers in Israel and globally.

Identifying and neutralizing UAVs remain a challenge with no comprehensive solution. Existing missile interception systems, such as Rafael's Iron Dome, David's Sling, and Israel Aerospace Industries' Arrow, are highly effective against missiles and rockets, but less effective against UAV threats.

Defense against UAVs is in global demand. The two-year conflict in Ukraine, for instance, is heavily influenced by their widespread use, and South Korea was recently targeted by hundreds of garbage-laden balloons sent by its northern neighbor, reminiscent of incendiary balloon attacks on Israel from Gaza and more recently from Lebanon. The data show that UAV threats are escalating: as of 2024, the market for UAV threat mitigation systems (including drones) was valued at $2.03 billion, with an annual growth rate exceeding 25 percent. By 2029, this market is projected to reach $6.3 billion.

Global Expansion and Recruitment
Until last year, the Israeli market accounted for approximately 80 percent of Capture's business. There has since been a strategic shift toward expanding its global presence, with 70 percent of its activity now projected for international markets.

"Our system spans the globe," says Braun. "It's in East Asia, South America, and the USA, and is used in partnerships with leading Israeli defense companies. We're forging collaborations with every relevant defense sector entity, in Israel and worldwide."

What is the breakdown between the military and civilian spheres?

"Capture primarily targets the military market, which accounts for 80 percent of its operations," says Braun. "However, we also engage in the civilian sector, focusing on areas such as safeguarding energy facilities and mineral resources."

Are you hiring?

"Yes, we are! In response to increased product demand, Capture is actively hiring engineers and operations staff. We are also exploring the expansion of our sales office in Europe. By 2025, we plan to form significant partnerships in India and establish a sales office and integration center in the USA."

Any thoughts on an IPO or raising capital?

"We're exploring it. We'll see how the year ends."