Venture-capital firms that have been pouring money into American defense startups are setting their sights on Israel, investing in military tech companies that have emerged since the country went to war in Gaza and Lebanon.

Driving the investment is the belief that Israeli firms will increasingly compete for contracts in the U.S. and in European countries where military spending is expected to surge in coming years. One Israeli startup called Kela has recently scored investments from two of the biggest U.S. venture-capital firms involved in the defense market, as well as from the Central Intelligence Agency’s investment arm.