Israeli Fund Surround Ventures Raises $50M Round for Deep Tech and Quantum Computing
Venture fund Surround Ventures announced the first close of its second fund, which will focus on investments in Israeli startups in deep tech, including quantum computers, biotech, and defense drones.
The Surround Ventures announcement is not just news about a $50M fund close. It is a clear signal of a restructuring in the global venture capital landscape: while major players are in turmoil, private 'operational' money is finding refuge in deep tech, and Israel is becoming their main hub. Jared Kash and Yaron Kniajer, the fund's founders, are methodically gathering people who are not just seeking profit but building a new infrastructure for defense and computing.
The Essence: What Is Really Happening
Surround Ventures has completed the first round of its second fund with a target of at least $50M. The fund's focus is on Israeli startups or companies with Israeli entrepreneurs in defense tech, biotech, quantum computing, and AI for energy. This is not classic software investing or an attempt to replicate the cybersecurity success of the 2010s. It is a direct indication of the growing role of deep tech in a country where national security and survival have always been drivers of innovation.
The successful round close demonstrates that private investors with experience in technology and defense maintain an appetite for the most capital-intensive and long-term projects. The fund's advisory board includes former Weizmann Institute President Professor Daniel Zajfman and former Intel Israel head Yaniv Garty. These are not just figureheads but keys to the ecosystem of academic research and industrial implementation.
Timeline and Context
The announcement was made on May 4, 2026, in Globes. It comes amid a global frenzy around quantum computing and renewable energy. Simultaneously in Europe, Expeditions Fund II raised over €100M for similar objectives: defense, AI, quantum tech, autonomy, and space, including investments from the NATO Innovation Fund and the Polish Development Fund.
The coincidence of these two events signals the formation of a global trend: deep tech is finally ceasing to be the exclusive domain of government labs and is becoming a field for large venture deals. American, European, and Australian 'private players,' including Hollywood producer Lawrence Bender, are entering this sector through proven channels like the Israeli ecosystem.
Who Wins and Who Loses
Winners:
- Israeli deep tech startups. They gain not only financial leverage but also strategic partners capable of taking them to the US and global markets.
- Corporate giants in energy and computing. The fund acts as a filter and incubator for technologies that, in a few years, may be acquired by major players, saving them internal R&D costs.
- The defense sector. Investments in autonomy and drones through venture mechanisms allow attracting talent and ideas that previously leaked into consumer services.
Losers:
- Traditional venture funds. In a highly competitive environment for mature startups, deep tech looks riskier. Surround Ventures is carving out a niche that could yield tenfold returns but requires engineering intuition and defense connections that most financiers lack.
- Startups without strong defense sector ties. The fund openly bets on a specific cohort of entrepreneurs, including alumni from intelligence tech units. This could widen the gap between 'insiders' and 'outsiders' in access to capital for deep tech.
What the Media Isn't Saying
Official releases state the fund size as 'at least $50M,' but the founders discuss the possibility of increasing it to $81M. Globes explicitly notes that this figure is a 'tribute to Unit 81.' This is not a marketing gimmick but a marker clearly defining the target audience for projects. Unit 81 is an elite technological unit of the Israel Defense Forces, a breeding ground for personnel creating breakthrough military technologies. The fund is not just looking for startups; it deliberately works with a narrow group of people possessing unique practical experience in building cyber weapons and electronic warfare tools.
The second insight concerns the fund's architecture. Such aggressive fundraising for deep tech, especially quantum computing, which may not yield commercial returns for another decade, implies the presence of a non-market anchor investor or an exit strategy tied to the interests of US and Israeli defense agencies. Likely, major defense contractors view this fund as a legal and effective way to outsource innovation without spending billions on acquiring immature technologies.
Forecast: Next 30 Days and 90 Days
30 days (by early June 2026):
Surround Ventures will announce its first investments from the new fund. Based on the first fund's portfolio (deals in the US and Israel), these will be startups in autonomous systems or new materials for quantum electronics. Simultaneously, we will see a wave of similar but smaller funds in Europe trying to copy this model.
90 days (by early August 2026):
The fund will likely close the round oversubscribed, reaching the $81M target. A key moment will be portfolio companies demonstrating prototypes for the military. Given the current geopolitical context, demand for surveillance, critical infrastructure protection, and anti-drone technologies will only grow. I expect at least one of the fund's projects to receive a direct contract from the Israeli or US Ministry of Defense. Surround Ventures' bet on the elite from Unit 81 is not just about finance; it is about building an exclusive club that will begin defining deep tech industry standards in the region for years to come.
— Editorial Team
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